Great potential in offshore wind power
Offshore wind power is an interesting potential form of renewable energy production, and we want to harness it to build societally influential business.
State area, property tax to the local municipality
The regional economic impacts of the construction and maintenance of the offshore wind farm are considerable. The accrual of property tax on offshore wind production will have a very significant positive impact on municipal finances.
Municipalities have the right to levy taxes on properties located in their areas in Finland. Property taxes on the Korsnäs offshore wind farm are paid to the municipality of Korsnäs, even though the offshore area is state-owned. Metsähallitus’ tasks include managing the state’s land and sea areas.
The tax revenue obtained by an individual municipality from wind turbines depends on the construction costs of the turbines, the efficiency of the wind farm and the tax rate determined by the municipality. The annual property tax revenue from one offshore wind turbine to the municipality of Korsnäs can be up to EUR 70,000 a year. In this case, the annual revenue from the wind farm is potentially several million euros.
In addition, the increase in economic activity creates other cash flows both during construction and when production starts. Its employment impacts will be generated by such activities as planning, construction of wind farm infrastructure, transport, wind turbine installation as well as accommodation and catering services.
Property tax reduction on offshore wind power
Due to more expensive foundations, an offshore power plant has more structures that are subject to property tax than land-based wind power. According to the Finnish Government Programme, property tax on offshore wind power has been reduced as it has been considered one of the reasons that the development of the reserved areas has not started yet.
Finland competes for offshore wind investments
Several areas possible for offshore wind production have been allocated to Finnish sea areas in the provincial plans, and Metsähallitus, as the holder of public water areas, has entered into a reservation agreement with energy companies for part of the areas.
Offshore wind power production is expected to grow rapidly in the future. As technology advances, offshore wind farms will be larger and efficiently produce more fossil-free electricity. Offshore wind power does not involve the same difficulties in finding a suitable location as onshore wind power.
Finland competes with our neighbouring countries for offshore wind energy investments. Success in the competition is influenced by e.g. wind conditions, the location of customers purchasing electricity on long-term contracts, and different investment incentives in different countries.
Europe is building offshore wind power
According to EU’s offshore renewable energy strategy, published in November 2020, the EU aims to increase offshore wind power from the current 12 gigawatts to 300 gigawatts by 2050. The strategy also focuses on the Baltic Sea.
Measured by cumulative capacity, Europe remained the largest offshore wind region in 2021.
Metsähallitus’ operating model for offshore wind power
Metsähallitus operates at sea both as a project developer for wind power and as an issuer and lessor of reservation and access rights contracts. We do not build wind turbines or have them built, we do not own the wind parks or participate in energy production. In all cases, ownership of the water area remains with the state.
Korsnäs is the first offshore wind power project in which we act as the project developer. As this is such a large project, we are looking for a partner for it. Metsähallitus will organise a tender competition to find a partner. The partner may be from Finland or foreign, but they must meet the terms of Metsähallitus’ responsible business operations.
Reconciling different objectives is in our core competence. We have an enormous stakeholder network and expertise to engage and listen to this network. The development of the offshore wind farm requires a participatory approach and good communication with both decision-makers and local people, and we have expertise in this.
Metsähallitus is an economically stable state-owned enterprise and we have a vast experience in responsible project development of land-based wind power. The Government Programme details Finland’s ambitious goal to be a fossil free/carbon-neutral welfare society by 2035. We are implementing this goal through our climate programme. Our aim is to multiply the production of renewable energy in state-owned land and water areas by 2030.
After the development of the project, Metsähallitus will act as a lessor in wind farms, and the rental payments received from wind farms will form a part of Metsähallitus’ profits. At the moment, this share is around 10%, but it is growing all the time as new power plants are built.