Nine countries border the Baltic Sea. Eight are in the EU and the ninth is Russia. As the EU’s energy war with Russia heats up, this region is on the front line. But the area’s historic division between East and West during the Cold War has left long-lasting scars, meaning some of these EU countries are more energy-connected to Russia than their EU neighbours.
From 1945 to 1991, the Iron Curtain stretched through the gulf separating Finland and Estonia, cut southwest across ancient trade routes between Sweden and the Baltic and Polish coasts, and made landfall next to Lübeck, West Germany, just south of Denmark.
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For 500 years, Lübeck was the capital of the Hanseatic League, a confederation of city-states similar to the EU that managed immense wealth in trade routes crossing the Baltic Sea. The Iron Curtain severed those ties that remained, and the result can be seen in Europe’s energy grid today. The three Baltic states are disconnected from the European electricity and gas grids, dependent on Russia. Poland and the former East Germany have built connections to the West, but are still dependent on Russia for both gas and electricity.
As Russian President Vladimir Putin threatens to shut off the gas taps to Europe, leaders of the eight EU countries bordering the Baltic Sea met at a summit in Copenhagen at the end of August to discuss how to revive old connections with a Hanseatic League of energy. Leaders at the Baltic Sea Energy Security Summit issued the Marienborg Declaration, named after the castle in which it was signed, which commits them to several measures including a 700% increase in offshore wind energy capacity in the Baltic Sea within eight years.
“Russia’s invasion of Ukraine has created a new security situation in which energy has become a political weapon,” declared Danish Prime Minister Mette Frederiksen at the summit. “For this reason, we need to stand shoulder to shoulder in the Baltic Sea region and cooperate much more closely on our energy supply. We must work together to make the whole region free of Russian energy as soon as possible, so that we strengthen our resilience against Putin. This will be done, among other things, through an ambitious development of renewable energy – for a greener and safer future in the Baltic Sea.”
Wind power potential
Experts say the Baltic Sea has huge potential for offshore wind but that potential has remained largely untapped because of the legacy of the Cold War leaving West and East disconnected, with most of the offshore wind investment going next door to the North Sea.
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By GlobalData“The Baltic Sea could host up to 93GW [gigawatts] of offshore wind farms,” says Pawel Czyzak, a senior analyst with the energy think tank Ember, citing a study by the European Commission. That alone would get the EU one-third of the way to its overall goal of generating 300GW of wind power by 2050. But today installations in the Baltic Sea generate a paltry 2.8GW, according to industry association WindEurope.
Investment has been slow, and Czyzak points out that even the declaration’s at-least-700%-increase commitment, equal to 19.6GW, would still only be a quarter of the sea’s total potential. “The declaration could and should be more ambitious. More importantly, we’re at a time when we can’t just settle for political declarations, we urgently need delivery.”
According to the Commission's study, the southern part of the Baltic Sea along the German and Polish coasts holds the greatest renewable potential because of wind conditions, connection costs and market values. The report’s market and grid modelling conclude that offshore wind power in those southern sites could be competitive by 2030, even though the upfront building costs are extremely high.
The report recommends that countries and regions take offshore wind power planning into consideration early on in grid planning, which would produce substantial efficiency gains. The development of offshore hubs connecting wind power to two or more countries would be beneficial and spread the costs between countries. The report calls for regional cooperation on tendering and support mechanisms, grid connection charges and cost sharing mechanisms, and integrated regional grid planning.
Daniel Badman, CEO of the Swedish Wind Energy Association, says the Copenhagen summit was a sign that Baltic Sea governments are finally willing to cooperate on these expensive projects. “Strong regional cooperation is a prerequisite for hybrid projects, where wind farms and electricity infrastructure are built offshore to directly supply two or more countries,” he says. Hybrid projects can also create opportunities to integrate new innovative technologies such as the production of hydrogen and other electrofuels, he adds.
Better connections
As the Commission’s study suggests, turbines alone cannot unlock the potential of renewable energy in the Baltic Sea. The region will have to greatly improve its interconnections. The Marienborg Declaration foresees this through the existing Baltic Energy Market Interconnection Plan, which has the goal of completely synchronising the three Baltic states with European networks by 2025.
The electricity grids of Lithuania, Latvia and Estonia still operate in sync with the Russian and Belarusian systems, even though Ukraine switched to the EU grid earlier this year.
Significant progress has been made, such as construction of the Estlink, Nordbalt and LitPol links which will connect the Baltic States with Finland, Sweden and Poland, respectively. However, Finland and Sweden are actually on a different electricity grid from the EU’s main grid; the goal is to get all three of these areas connected so that wind power generated in the Baltic Sea can go where it is needed most at any given moment.
An example of the type of cooperation needed is the recent agreement struck between Denmark and Germany to construct a cable from Bornholm Energy Island to Germany, sending wind power from Denmark to Germany and the rest of Europe. The cost for the project will be shared equally between the two countries.
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In the short term, increasing gas interconnection infrastructure is the priority as all countries in the region seek to import and distribute new liquified natural gas (LNG) imports from the US and other places. “In the short run, Russian energy will also be replaced by an increase in fuel imported by sea,” the declaration states. “We agree to collaborate on an increase of fuel imported by sea, including liquefied natural gas (LNG) and liquefied bio-gas (LBG), through the EU Energy Platform.”
Other areas of collaboration discussed at the summit included green hydrogen distribution focused on shipping and aviation, cooperation between transmission system operators, and looking at knowledge-sharing for combined heat and power plants. National leaders also discussed public-private collaboration for these projects.
Different visions
However, this is not the first time the Baltic Sea states have promised to work together more closely on renewable energy, and past experiences have shown that different political priorities can get in the way. In September 2020, the eight EU Baltic countries signed a joint declaration with the European Commission to accelerate the build-out of offshore wind. This prompted the Polish government to adopt its first Offshore Wind Bill in November 2020, which aimed to simplify administrative procedures for the build-out of 5.9GW of offshore wind in Polish waters by 2030.
But since then, Poland’s ruling hard-right Law and Justice party, which has continually blocked EU climate action and championed coal, has not seemed very interested in renewables – an attitude that has only hardened since Russia’s invasion of Ukraine.
Another legacy of the Cold War is very different political orientations between the historically left-leaning Nordic countries in the Baltic’s north and the conservative right-leaning countries in the Baltic’s East and South. Choice over the sourcing of energy remains a national competence, a reality reaffirmed in the new Marienborg Declaration, which promises to “respect Member States’ national energy policy priorities and their choices of energy mix”.
Poland’s energy plan for 2040 does assume the installation of 11GW of offshore wind capacity by that date, which would be approximately 19% of Poland’s electricity production. It is a relatively conservative plan given the Polish Wind Energy Association estimates the potential at up to 28GW. Yet even this conservative plan now seems to be in jeopardy as the government talks up an increase in coal as a quick solution to vanishing Russian gas.
Renewables businesses hope the new renewed impetus for Baltic Sea energy cooperation can nudge the Polish government in their direction.
“Poland should learn from the Danish and international experience,” says Michal Smolen, head of the energy and climate programme at Polish think tank Instrat. He points to a report published by the national auditing office the Polish Supreme Chamber of Control earlier this year that found numerous problems with the country’s onshore and offshore wind plans, including lagging investments in the transmission grid, cumbersome permitting procedures, lack of financing and the government’s too-low ambitions.
“This will translate, among other things, into postponing the entry of this source into the energy system from 2024–25 to 2027,” he says. “As a result, they will be too late to fill the gap resulting from the shutdown of some of the least efficient coal-fired units in the middle of the decade.”
“Connecting offshore wind parks to the energy systems of different countries [through hybrid projects] improves their stability and resilience to crises, although it requires billions of dollars of investment,” Smolen adds. “The possibility of importing cheap renewable energy could ultimately lower electricity prices on the Polish market [but this] does not necessarily suit the domestic coal-fired power industry.”
