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Can offshore wind become a catalyst for Latvia’s economy?

March 17, 2023
Vēja enerģijas asociācija

The use of wind in the production of electricity is one of the most discussed energy issues in Latvia in recent years, even ahead of the transition to the EU Green Deal or the need to rapidly achieve energy independence from Russia. On the one hand, surveys show that for the past several years most of the public is in favour of the transition to green energy production, on the other hand, the regulatory framework has not been conducive to the construction of wind farms and the development of projects has been hindered by various means. Currently, we have taken a fast-track and are taking a step forward with offshore wind by developing a joint Latvian-Estonian project for which the regulatory framework is being prepared. However, speculations, accusations and intrigues, myths about coastal erosion, damage to the landscape and the destruction of tourism in Kurzeme have already begun. The epic begins from the end, so the question naturally arises – do we, as a society, understand why we need offshore wind energy?

In short, we truly need offshore wind energy if we want to produce cheap, renewable electricity, achieve an economic breakthrough, and want to avoid being at the bottom of countless statistical charts and on the periphery of other industrialized nations. Cheap electricity and increasing consumption are a prerequisite for prosperity. Effective use of offshore wind energy (not to mention, that the potential of offshore wind in the Baltic Sea is very high) can contribute to a significant breakthrough in the economy. And by that I don’t mean only the availability, price, and marketing of electricity per se, but the chain of events of improving the economic situation that cheap electricity can initiate. What could those be?

First, the use of offshore wind in the production of cheaper electricity will help the development of the national economy. There are no large production projects in Latvia because we have very high electricity prices. All industrialization in recent years has been based on electrification, robotization and high consumption of electricity. The availability of cheap electricity can promote the development of many industries. Construction, engineering industries, logistics, transport – it is difficult to name an industry that is not affected by electricity prices.

Based on this argument, we do not need to look far, to see an example on the importance of the availability of electricity – we can look at the war in Ukraine and consider our latest electricity bills. This winter brought with it a challenge for everyone. A beloved and successful business has announced a ‘winter hiatus’ due to high electricity bills. Luckily, it’s only a temporary break. A small example, but there certainly have been many such companies this winter. Many more companies might also want to enter the Latvian market if we offered them cheaper electricity.

Secondly, the use of offshore wind in the production of cheaper electricity will help the entry of new industries and projects in Latvia, attracting investments. Not only by building and maintaining offshore wind farms but looking more broadly. Expensive electricity, which means that the price of one of the basic needs for production is high, does not make us more attractive in the eyes of investors.

An excellent example of the interconnection of the price of electricity and production can be found in the north of Sweden, where the price of electricity is deliberately kept low to encourage production and ensure that economic activity and development are happening there, and that people are interested in living there and creating their own companies in the region. Without this strategic decision, the region would risk becoming Sweden’s ghost town. Instead, production is currently happening there.

During the negotiations between the members of the Latvian Wind Energy Association, a prospective Danish metalworking company honestly admitted that it will not expand in Latvia for two reasons: high electricity prices and expensive human resources. We are not interested in making human resources cheaper, because we want our people to be properly valued and rewarded, but we can achieve cheap electricity. Otherwise, new factories will open elsewhere, as electricity is one of the company’s biggest cost drivers.

The use of offshore wind in the production of electricity, or, in general, cheap electricity in large quantities and “surpluses” of wind energy provide an opportunity to produce green hydrogen and develop this industry, as well as attract investments. Hydrogen serves both as an alternative way to transmit electricity (since hydrogen in liquid form is easy to transport, store and convert back into electricity) and as an alternative for the transportation industry. Currently, this industry in Latvia is still in the development phase, but by starting to produce electricity in large volumes, it has every opportunity to improve alongside the offshore wind industry.


Thirdly, cheap electricity and development of production industries, attraction of new investment projects will ensure the improvement of public welfare, meaning the creation of new jobs, improvement of employment, especially – reduction of youth unemployment and reduction of emigration, and retention of the workforce. We urgently need investments and development, projects of significant innovation and large infrastructure facilities to interest young people in building a valuable career here in Latvia.

There are many benefits to using offshore wind energy, which will start with the availability of cheap electricity. We can make Latvia a zone of economic growth and develop industrialization. Primarily – with cheap electricity, secondarily – by developing all related industries and retaining human resources. What is necessary for Latvia to start using offshore wind energy in practice? There are several issues that still need to be resolved: the inadequacy of the electricity transmission network, regulatory framework, adaptation of port infrastructure and availability of human resources. These are challenges and must start with a quality discussion between the parties involved. Together with experts from the Baltic countries, industry leading specialists and policy makers, we will start this at the biggest wind energy conference in the Baltics in mid-April. A successful dialogue is only the first step towards real solutions, but it must start there.