New Report from Ramboll – Quantifying Offshore Wind Energy
Ramboll Finland’s regional economic impact assessment of Ilmatar’s offshore wind energy projects on Åland is now complete. The report showcases substantial impacts at both regional and national levels.
“The implications are significant, irrespective of the approach. The most compelling aspect of the report is how the economic benefits can differ depending on if Åland collaborates closely with sectors that benefit from offshore wind energy,” comments Anna Häger, Regional Manager at Ilmatar Offshore.
In late September, Ramboll Finland delivered the findings of the Regional Economic Impact Assessment (REIA) commissioned by Ilmatar. The evaluation leverages data gathered by Ilmatar on the Stormskär and Väderskär projects located in the northern sea areas of Åland.
“Ilmatar intends to remain a majority stakeholder in Åland’s offshore wind energy for the long term. We aim to provide real and current figures based on our research, and clarify the resulting opportunities and revenues beyond lease and property taxes,” explains Häger.
“With a maritime foundation, Åland possesses a business ecosystem that we can further develop for investments in offshore wind energy. Åland already has a workforce with the necessary expertise; we are initiating training programmes to cultivate new expertise and have strong regional connections which can attract qualified individuals to relocate here. The benefits of establishing offshore wind energy encompass much more than just affordable electricity. It will have ripple effects throughout society for decades,” she continues.
To estimate the escalation of the regional economic value based on the degree of collaboration between public and private entities, Ramboll evaluated the project using three model scenarios.
Scenario one, Coordination, is calculated based on minimal collaboration without a local focus, procuring services and products from existing providers. Scenario two, Collaboration, anticipates market development both regionally and nationally to supply products and services that support the construction and operation of offshore wind energy, focusing on leveraging local and national resources. The third scenario, Cooperation, illustrates significantly greater positive impacts due to combined efforts, robust local capacity building, and supportive investments from both businesses and the community.
“The report confirms that with the right commitment, the local returns from offshore wind energy can multiply. The differences in figures between the scenarios? It depends on how boldly society chooses to act,” emphasises Häger.
Employment and Revenue on Åland
“We lease the seabed for 25 to 40 years and then return it. During this period, labour demand will equate to several hundred to a few thousand individuals depending on the project phase. If the wind farm is renewed, the labour demand increases by 60%, primarily locally,” Häger describes.
The most substantial revenues during operation derive from the maritime industry, insurance, and maintenance, estimated between 730 million and 1.14 billion euros. In the median, the Collaboartion scenario, the regional GDP is projected to increase by 1.5% annually.
The construction phase triggers significant economic activity, granting Åland industries up to 1.1 billion euros, with a labour demand equivalent to 1,997 to 6,739 full-time positions over two to three years.
The development phase requires 347 to 522 full-time positions over seven years.
Throughout the project’s lifespan, payroll taxes estimated between 185 and 383 million euros are anticipated to be generated on Åland, with over 20% benefitting the municipalities.
“The largest economic impacts result from direct impacts. Employment impacts, on the other hand, are realized mostly through indirect impacts when many services and products are purchased from various sectors to build and operate the offshore wind farm, who then acquire more products and services from other companies. However, the impacts depend heavily on how companies operating at Åland and in mainland Finland can respond to the changing demand and develop their operations in the right direction”, says Samuel Rintamäki, Consultant, Ramboll Finland.
Employment and Revenue in Finland
Åland’s wind energy projects offer substantial economic impacts in Finland, thanks to already established players providing services. The most significant national economic impacts occur during the construction phase, involving Finnish experts in design, permitting, cable manufacturing, and installation.
Over the project’s duration, it’s expected that 5.6 to 8.8 billion euros of production will be allocated to Finnish companies. Additionally, labour demand will correspond to 28,000 to 45,000 full-time positions in Finland. Taxes are estimated between 1.3 and 1.8 billion euros. However, these figures are heavily dependent on the value-added tax and where the electricity is sold.
Direct Impacts on Åland
Ilmatar’s operations result in significant direct economic impacts. The primary revenue comes from electricity sales, the bulk of which consists of value-added. Taxes from these operations over the project’s lifespan are projected to be around 718 million euros, inclusive of municipal tax, property tax, and corporate tax.
The seabed lease rate remains uncertain but could amount to up to 8 million euros annually, according to AFRY’s report.
Opportunities and Challenges
The project’s economic impacts are significant but could change with technological and market developments. New expertise is required in both Åland and Finland to address the needs of the burgeoning offshore wind energy market. Proactive measures and business development are necessary before construction commences. On Åland, a focus on local capacity building and collaboration can maximise effects. Relocated workers may also increase the demand for public services. Open dialogue between private businesses and regional officials is vital for success.
Ramboll’s model illustrates how funds are utilised and distributed within the area, both currently and following economic shifts. The model depicts how various sectors influence one another.
- The project is based on two parks, Stormskär and Väderskär.
- Area: 571 km²
- Turbines: 123 units, 20 MW each
- Total capacity: 2460 MW
- Infrastructure costs: up to 10 billion euros
- Operational costs: 100-150 million euros/year
- Production: 10 TWh/year, selling at 45-55 euros/MWh
Currently, the average lifespan of offshore turbines is 20-25 years; however, this may evolve with technological advancements. In this assessment, a lifespan of 25 years is used.