EU RED III target: at least two cross-border offshore wind projects by 2030

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Article 9 of RED III requires all Member States to launch at least two cross-border renewable energy joint projects by 2030. ELWIND, a joint project between Latvia and Estonia, is currently the main contender for this status in the Baltic Sea context. The project potentially serves as a pilot initiative that could attract EU support, provided that it fully meets the criteria of the directive – an officially designated renewables acceleration area, a coordinated single contact point structure and a transparent licensing procedure in both countries. While Estonia is moving towards a single contact point and the digitization of licenses, Latvia has not yet adopted a specific law regulating offshore wind energy. In addition, there is no clear division of institutional responsibilities, which hinders cross-border synchronization. Without these components, ELWIND remains a plan rather than a real joint project within the meaning of RED III. This also raises the question of whether a second cross-border offshore wind project in the region will be identified and implemented by 2030.

In September 2024, the European Commission sent formal warning letters to 26 EU Member States in its infringement package, stating that they had not fully transposed the requirements of the revised Renewable Energy Directive (RED III) regarding the simplification and acceleration of the permit granting process. Continue reading “The European Commission is starting infringement procedures against 26 EU Member States, including Latvia, Lithuania, Estonia, and Poland, for not fully implementing the RED III requirements”

Reorganization of the Environmental State Bureau – establishment of the Energy and Environment Agency

In accordance with Cabinet Order No. 1191 of December 17, 2024, the Environmental State Bureau (VPVB) and the State Construction Control Bureau (BVKB) will be reorganized on February 1, 2025. The VPVB will take over the functions of the BVKB in the administration of energy policy, and the name of the office will change to the Energy and Environment Agency (EVA).

The new EVA will report to the Ministry of Climate and Energy, and its main objective will be to combine the functions of several institutions, thereby facilitating the implementation of renewable energy projects and making Latvia’s environment more attractive to investors.

Until now, project developers have often struggled to obtain various information or permits from multiple institutions – the EVA will significantly simplify this process by combining the functions of the responsible institutions in one place.

These changes also mark Latvia’s approach to creating a single point of contact in accordance with the requirements of the Renewable Energy Directive (RED III).

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Sources: On the Reorganization of the Environmental State Bureau and the State Construction Control Bureau (Cabinet Order No. 1191, 17.12.2024.); State Construction Control Bureau (Republic of Latvia), 17.12.2024.

Two-way contracts for difference are becoming the dominant model for offshore wind energy support in the region

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The mechanism of two-way contracts for difference is becoming the dominant support instrument for offshore wind energy projects in the Baltic Sea region. Lithuania is already moving towards this model, while Poland is gradually transitioning to a system of dynamic price adjustment and regional differentiation. This approach provides greater stability for investors by reducing the risk of market price fluctuations and ensuring long-term revenue predictability. At the same time, the state controls the amount of support, preventing excessive use of subsidies. However, national models differ – for example, in terms of the duration of two-way contracts for difference, indexation methods, capacity commitment obligations, and termination mechanisms. This means that investors need to conduct an in-depth analysis of each country’s system in order to avoid legal and financial risks. The lack of harmonization complicates the implementation of cross-border projects but also offers flexibility for national strategies.

The Lithuanian National Energy Regulatory Council (VERT) has re-announced a 700 MW offshore wind auction after the first round of the tender was suspended in January 2024 due to insufficient competition. The new tender provides for a Contract for Difference (CfD) support model and price indexation, with a deadline for applications set for March 18, 2025. The aim of the tender is to attract stronger investor bids and promote Lithuania’s strategic goal of developing 1.4 GW of offshore wind capacity by 2030.

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Sources: Renewables Now, 18.11.2024.; OffshoreWIND.biz, 18.11.2024.

The Polish government has adopted a law that allows different maximum electricity prices to be set for offshore wind farms depending on the geophysical conditions of the specific sea area (depth, seabed quality, distance from the coast). The new regulations give the Minister of Climate and Environment the right to set differentiated price caps by regulation, taking into account the actual construction and operating costs. This approach is intended to attract investors to less commercially attractive areas and improve market competition.

At the same time, the government has approved an increase in the price cap for the second phase of OWF development auctions from 471.83 PLN/MWh (around 110 EUR/MWh) to 512.32 PLN/MWh (around 118 EUR/MWh). This decision is based on current inflation data, cost increase analysis and investor signals that the previous rate is not sufficient for the viability of projects. In the previous phase (5.9 GW), the support price was 319.6 PLN/MWh (around 74 EUR/MWh).

New auctions are planned for 2025, 2027, 2029 and 2031 with the aim of selecting projects with a total capacity of 12 GW. The support system includes covering negative balance payments, providing investors with compensation for the difference between the market price and the guaranteed price. However, some industry representatives point out that the desired price level would be 500-600 PLN/MWh (around 115-138 EUR/MWh) to cover rapidly rising costs.

Source: BalticWind.EU, 14.11.2024.

The Estonian Consumer Protection and Technical Regulatory Authority (TTJA) has initiated a building permit procedure and environmental impact assessment for two offshore wind farms more than 30 km west of Saaremaa Island. The project developer, Norwegian company Deep Wind Offshore AS, won the Saare 2.1 and Saare 2.2 offshore auctions in June.

According to the submitted applications, up to 104 turbines with a total capacity of up to 1,560 MW and up to four substations are planned in the Saare 2.1 area (163.8 km²), while in the Saare 2.2 area (88.5 km²), up to 56 turbines with a capacity of up to 840 MW and up to two substations are planned. Both areas are located in Estonia’s maritime spatial plan as suitable for offshore wind development. Continue reading “Norway’s Deep Wind Offshore launches offshore wind project near Saaremaa Island”

The Estonian Consumer Protection and Technical Regulatory Authority (TTJA) has launched a procedure for granting a building permit and assessing the environmental impact of the offshore wind farm in the Gulf of Riga, south of Kihnu Island, as applied for by Liivi Offshore OÜ.

The project envisages up to 140 turbines, which can reach a height of 300 meters above sea level, with a capacity of up to 20 MW each. The total potential capacity in both areas (zones 1 and 2) could reach up to 2010 MW, while the planned project area covers a total of 168 km². The decision provides for the applications for both areas to be combined into a single procedure.

Liivi Offshore OÜ must then develop an environmental impact assessment program within 18 months and submit an environmental impact assessment report within 24 months of its approval. Only after the report has been approved will the company be able to obtain a building permit, continue with the design and apply for a construction permit.

Source: Consumer Protection and Technical Regulatory Authority (TTJA), 09.09.2024.

On May 28, 2024, the Estonian Parliament (Riigikogu) adopted amendments introducing an innovative offshore wind project “building rights license” (superficies licence) system, which combines a building permit, water use permit and land use rights in a single document. This significantly simplifies procedures and reduces litigation risks. The license is granted by the Estonian Consumer Protection and Technical Regulatory Authority (TTJA), which effectively acts as a single point of contact for offshore wind projects.

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Source: Ministry of Climate (Republic of Estonia), 29.05.2024.

Slow progress on offshore wind farm projects contributes to information vacuum

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The development of offshore wind farms differs from other types of renewable energy resources in its long-term and complex planning cycle. It often takes 7-10 years from the initial identification of a site to commercial operation, during which time there is little public information about progress. This creates a perception among the public and sometimes industry representatives that projects are not moving forward, and encourages speculation, misunderstanding, or even rumours. Media interest in this process wanes between visible activities (such as auctions or the issuance of permits). As a result, the offshore wind energy sector faces a communication deficit, which can also affect public support. Industry representatives and public authorities need to find new ways of communicating, such as regular progress reports or public data platforms. This would help to build trust and prevent misinformation or obstacles to public participation in a timely manner.