The Finnish Ministerial Committee for the Economic Policy approved a proposal for an auction model to be used to lease public water areas managed by Metsähallitus. The aim is to accelerate the development of offshore wind projects under market conditions. The first auctions will take place in late 2023 or early 2024.
The proposed auction model does not apply to Åland province, nor to offshore wind projects outside territorial waters in the Finnish exclusive economic zone. A model for the operation of the economic zone will be defined at a later date.
Metsähallitus, an entity that manages land and water owned by Finland, will conduct a preliminary survey of the water areas and, based on this survey, will select those to be auctioned, taking into account the overall public interest. Depending on the importance of the project, the Council of State or the Ministerial Committee for the Economic Policy shall approve the areas to be leased, and the terms and conditions of the auction before it begins. State authorities may also set minimum prices for leasing these areas. The auction does not include the provision of financial support to successful bidders.
– “An auction model for leased offshore waters for offshore wind energy has been developed based on Metsähallitus’ experience with onshore wind projects, in cooperation with ministries and other government and energy sector actors”, the Minister of Agriculture and Forestry Jari Leppä announced.
The winner of the auction will be responsible for, among other things, applying for the necessary permits. Once the contracts are signed, he will be able to develop the land in a way that suits him. Planning and permitting for offshore wind projects can take up to 5-10 years so it is important to start project development early enough to shift development responsibility to the developer at an early stage.
Offshore sites will be subject to a lease payment determined by auction based on the area of the site in the development and construction phase, and the amount of electricity generated primarily in the production phase.
The first auction is expected to take place between 2023 and 2024 and will include 3-4 sites suitable for offshore wind.
Finland hopes to increase profitability of offshore wind investments
In recent years, there has been intensive technological development of wind power, and a significant amount of primarily onshore wind power is now being built in Finland under market conditions. The profitability of offshore projects in Finland may improve in the coming years, which is why operators are increasingly interested in Finnish marine areas, including waters managed by Metsähallitus which manages state-owned land and waters.
New wind energy projects are also needed to meet Finland’s climate and energy policy goals. Finland’s goal is to become carbon neutral by 2035.
– “In the coming decades, we will need much more carbon-free electricity to meet the needs of industry and society as a whole. Therefore, it is extremely important to create a clear and predictable regulatory environment for future investments in offshore wind energy”, emphasizes the Minister of Economy, Miki Lintilä.