Energy Update: First details of new act on offshore wind power projects in the Finnish EEZ released
In November, we published a regulatory update on the announced legislative project that aims to clarify requirements and processes for offshore wind power in the Finnish exclusive economic zone ("EEZ"). New information on the planned act on offshore wind power in the EEZ was recently announced as the Finnish Ministry of Economic Affairs and Employment ("Ministry") held a stakeholder meeting where the Ministry informed stakeholders of the current status of the legislative project and the initial planned model, including tendering, to be applied to offshore projects in the EEZ.
The new act will regulate the construction of offshore wind projects
As described in our previous article, the Ministry is in the process of drafting a new act which will specifically regulate offshore wind farms in the Finnish EEZ. On 30 January 2024, the Ministry organised a stakeholder meeting to inform about the status of the legislative project and the initial planned model to be applied to offshore projects in the EEZ.
According to the Ministry, the legislative project aims, in particular, to clarify:
- determination of exclusivity right through a tendering process;
- permits required for offshore wind power (instead of the current consents set out in the existing Act on the Exclusive Economic Zone of Finland (26.11.2004/1058, in Finnish: laki Suomen talousvyöhykkeestä)) ("EEZ Act"); and
- legislation to be applied in the EEZ.
Tendering process for areas selected based on maritime spatial plan
During the stakeholder meeting, the Ministry presented its initial model, which may be summarised as follows:
- The Council of State (in Finnish: valtioneuvosto) decides on an offshore wind power area for which a tendering process will be organised;
- The Finnish Energy Authority (in Finnish: Energiavirasto) organises the tendering process for selecting the project developer for the area;
- The Council of State grants the winner of the tendering process an exploitation permit to exploit the designated offshore wind power area; and
- The selected project developer conducts further studies on the area, conducts an environmental impact assessment and applies for other required permits, such as a water permit, a new, separate technical building permit applicable in the EEZ and cable permits.
According to the Ministry, the areas for tendering process are planned to be selected primarily based on the maritime spatial plan (in Finnish: merialuesuunnitelma) The maritime spatial plan is currently being updated and is expected to be ready in 2026. However, in addition to the maritime spatial plan which currently does not have legal effects, weight will also be given to societal interests, i.e., national objectives, co-ordination of maritime activities, grid connection availability and other projects in the regional waters.
The tendering process to which the offshore wind power developer will participate in will rely on both qualitative criteria and price (especially fees during the production period), with the specific details to be outlined in a Governmental Decree that would be adopted under the new act.
The winner of the tendering process will gain exclusivity right to the project area
The exploitation permit granted by the Council of State would allow the selected project developer to conduct thorough research and refine the specific area for which it would apply for the necessary permits required for the construction of the offshore wind farm. The exploitation permit would establish conditions for such activities, including research requirements, right of use to the area, payment terms, deadlines for the progress of the project, and potentially a provision of a guarantee. The Ministry noted that the final exploitation right shall concern only the precise area in which the offshore wind farm project would be constructed, rather than the entire area that has been under research.
Further, the Ministry's initial model includes a new, separate building permit which would be granted by a new Regional State Administrative Agency (in Finnish: aluehallintovirasto). Currently, legislation related to building permits is not applicable in the EEZ, but construction in the EEZ is subject to consent of the Council of State. The purpose of the new building permit appears to be regulating the construction in more technical aspects than the current EEZ Act allows. The selected project developer would also apply for other required permits, such as a water permit. We expect that the legislative project will clarify the applicable permitting processes as currently ambiguities exist, for example, related to the requirement of flight obstacle permits.
Moreover, the model is planned to include an element to incentivise the selected project developer to develop the project actively and in a consistent manner. However, it remains to be decided whether the efficient development would be ensured by, for example, increasing annually a development period fee or a development period guarantee, or by a risk of losing the exploitation permit in case the project does not progress in accordance with the agreed schedule.
The new act will also regulate the construction of buildings and facilities related to offshore wind projects
According to the Ministry, construction of hydrogen plants in the offshore wind power areas is aimed to be considered in the draft. The new act is planned to be applied to buildings and facilities related to offshore wind power projects, for example, WTGs, associated hydrogen facilities and substations. However, the Ministry's initial intention appears to be that other activities, such as construction of a connecting line would continue to be governed by the existing EEZ Act and will not be subject to the provisions of the upcoming legislation nor its new tendering procedures. As mentioned in our previous update, the new act will be applied in parallel with, and in part instead of, the current EEZ Act. Further, amendments are expected to be made to the existing EEZ Act.
Final model still open
However, it was brought up during the stakeholder meeting that also alternative models are still being assessed by the Ministry and the final model and its details remain to be decided later. In the presented alternative models, the state-owned forestry enterprise Metsähallitus would organize the tendering process due to already having experience in organising tendering processes in the territorial waters. Our impression was that the Ministry is open to discuss potential models with the stakeholders and consider their expertise.
It is estimated that the initial draft will be circulated for comments in May 2024 and the government proposal will be submitted to the Parliament in autumn 2024. The new act is expected to come into force in January 2025 at the earliest.
Our Energy practice will follow the progress of the project and publish relevant updates as the legislative project progresses. Please do not hesitate to be in touch with the contact lawyers listed on this page. We are happy to discuss and give further insight into the matter!