Global Onshore Wind Market Report

Sweden has set ambitious targets towards decarbonization, which is driving the renewable sector. The government aims to fully decarbonize the electricity system by 2040 and achieve zero emissions by 2045, five years ahead of the EU target. In the wind sector, the goal is to achieve 100TWh of power capacity, out of which 80TWh will be contributed by onshore wind farms by 2040  (Swedish Wind Energy Association, 2021). These targets have boosted activity in the wind sector and resulted in record installations in 2022. BNEF anticipates that onshore wind’s cumulative installations will increase by 22% and its generation will rise by 42% by 2024 from 2022 levels. 

The Swedish onshore wind industry has faced significant challenges due to permitting delays and community veto powers in the project approval process. However, the government is taking steps to address these issues by limiting the “Municipality veto” to the early investment phase, thus reducing the risks for investors (Baltic Wind.EU, 2021). To accelerate the growth of wind power, the Swedish government has outlined a four-point strategy. One aspect of this strategy involves introducing a new law that will prevent local government from obstructing wind parks during the final stage of project planning. Additionally, in November 2022, the Swedish authorities proposed investing in their energy supply by streamlining the permit process for grid connections, allowing renewable projects to obtain grid approvals more quickly. If such approvals are simplified, about 8.8GW of onshore wind will come online in the coming years. 

Sweden’s onshore wind industry has been facing significant challenges with permitting delays and community veto powers in the project approval process. However, the government has taken steps to address these issues by limiting the “Municipality veto” to the early investment phase, thus reducing the risks for In an effort to accelerate the growth of wind power, the Swedish government has outlined a four-point strategy. One aspect of this strategy involves introducing a new law that will prevent local government from obstructing wind parks during the final stage of project planning. Additionally, in November 2022, the Swedish authorities proposed investing in their energy supply by streamlining the permit process for grid connections. This will allow renewable projects to obtain grid approvals more quickly (IEA, 2023). If such approvals are simplified, about 8.8GW of onshore wind will come online in the coming years (Wind Europe, 2023).  

Onshore wind-based power demand in Sweden has grown substantially due to favourable price dynamics. The high wind power condition creates downward pressure on wholesale electricity prices. In February 2023, Sweden recorded its highest-ever wind power generation of 4TWh, accounting for 27% of electricity generated, which triggered the average wholesale electricity price in Sweden to fall to €0.007/kWh from €0.23/kWh in December 2022 (Ember Climate, 2023). Besides, the electricity demand covered by wind accounted for 25% in 2022, which is expected to surge owing to technological development and infrastructural support (Wind Europe, 2023). On a brighter note, this has made subsidy-free wind power projects beneficial as participation in projects through PPA has increased. Global companies like Microsoft, Google, GE Renewable Energy, Volvo Group, and NTR PLC have entered the Swedish power segment utilizing PPA, resulting in rising market competitiveness. 

Sweden’s favourable market dynamics are enhancing investment opportunities for renewables both at the domestic and international levels. The supportive environment has underlined that the wind sector can now be built without subsidy support. The acquisition of a 528MW onshore wind portfolio in mid-2022 by RPC with an investment of EUR800 million attests to this (Power Technology, 2022).

Merchant power developers are agreeing to project financings with the route of loans to develop new wind farms. Among notable developments, at the end of 2022, a EUR50 million loan agreement was signed by the Nordic Investment Bank (NIB) and Kölvallen Vind AB for developing a 277MW onshore wind farm (NIB, 2022). A further investment of EUR4.7 million for a 17MW onshore wind farm in Sweden occurred, which was jointly acquired by Keppel Corporation and Keppel Infrastructure, holding a 16.3% stake (Energy Global, 2023). All these deals imply a positive investment outlook skewed towards the wind sector.

Apart from investments and financing deals, subsidy-free merchant projects through PPA have a strong presence. Moreover, in the absence of auctions, the current growth of the wind market is owed to its strong PPA deals. Some noteworthy PPAs of 2023 include a 10-year agreement between Vattenfall and Volvo Group for 140MW onshore wind farm (Renews, 2023) and another signed between Rottneros and EnBW for 116MW for 8.5 years (Renews, 2023).

Conversely, with the acceleration in capacity installations, there is an urgent need for electricity grid expansion and the upgradation of old lines. In this regard, Sweden’s national grid operator plans to strengthen and expand the electricity network with EUR1 billion in investments. The expansion strategy aims to increase the current capacity by 5GW and aims for the connection of an extra 4GW of renewable energy production (Digital Infra Network, 2022). In addition to strengthening the network, the rising concern related to energy security has necessitated the utilization of energy storage in power plants. To facilitate growth, BW group announced investing SEK1 billion in Swedish battery energy storage with developer Ingrid for 400MW storage (INGRID Capacity, 2023). Storage systems tagged to renewable power plants would be essential to reduce intermittency and ensure energy security over the long run.