The Wind Blows Towards Energy Freedom?

Professor Kevin Haines
May 2022

The answer, my friend, is blowing in the wind, the answer is blowing in the wind.” Wistful lyrics in which Bob Dylan bemoans the way in which people passively ignore the power of the wind as a metaphoric force for positive change. Although written in 1962 and reflective of the social climate of the time, Dylan’s lyrics have become very relevant and very practical, possibly even urgent, in today’s climate. Although most countries see a mixed economy of energy production, alongside an increased reliance on electricity as an energy source, wind power is assuming a significant and growing role in emerging energy strategies.


Ukraine-Russia and what it has taught us about the state of energy

Although it is still early days, the ramifications of Russia’s invasion of Ukraine coupled with Western Europe’s high level of dependency for its energy security on Russian oil and gas has already begun to have significant social and political consequences for the global West. The increased global cost of oil and gas is pushing millions more into fuel poverty and causing inflationary pressures that place additional burdens on ordinary people. Emerging geo-political responses include a shift away from dependence on international sources of energy and towards a more nationalist energy strategy. Currently, 40% of the Europe’s gas consumption relies on Russian natural gas. Following the Russian invasion of Ukraine and as part of the raft of sanctions applied to Russia, the EU wants to reduce Russian gas imports by 2/3 this year (2022) and gain independence from them entirely by 2027. RWE Renewables Offshore Wind CEO Sven Utermöhlen (as chair of the industry body Wind Europe) declared that “more than ever, energy policy is security policy”.


To what extent, therefore, can wind generated power contribute to the energy needs of the EU and promote great energy and social security?


The winds of change blowing through the EU

According to Wind Europe’s annual statistics 2021 report, 11GW of wind farm energy production was added to the EU’s capacity last year and 18GW are expected to be built per year through to 2026. However, to meet 2030 renewables target, the EU requires an increase in clean energy production of 32GW a year. Currently, therefore, there is clearly a gap in the EU’s current wind energy production estimates and that which is required to meet current clean energy requirements in line with climate change strategies.


The private sector and private finance clearly have an important (and arguably necessary) role to play in developing (investing in) wind power generation and its ability to meet the energy needs of industry and society as well as contributing to the maintenance of social stability.


Indeed, increasingly it is being recognised that both internationally and domestically that energy production/supply and social stability are highly interdependent: you cannot have one without the other. It is, perhaps for this reason that one of the Sustainable Development Goals (SDG 7) focuses on ensuring access to affordable, reliable, sustainable and modern energy for everyone by 2030. Yet, to achieve a Net-Zero carbon economy by 2050 (note not 2030!), an estimated investment between $92 - $173trillion in energy supply and infrastructure will be required. For this to happen, investment must rise from $1.7 trillion per year to $4.25 trillion per year. The greater part of this investment will need to come from the private sector.


To be sure, governments have an important role to play here. Governments need to have comprehensive and effective energy strategies focused on future energy needs and supply. Governments and indeed the EU are attempting to create the structures (incentives) for private finance to engage in green energy production. For example, the EU has plans to make permits (for a range of green energy projects) faster and easier to obtain. The commission has also proposed mapping out geographical areas that would be well-suited for renewable-energy projects based on their proximity to grid connections and limited concerns about biodiversity, compared with more environmentally sensitive areas. Both the EU and national government plans for energy production and supply tend to be multi-footed. Existing strategies include a mix of: both on-shore and off-shore wind, renewables, solar, hydro, nuclear and bioenergy. Paying for (investing in) the delivery of this mixed economy of energy generation and supply is, however, another matter entirely. Direct investment by governments can be measured in the millions: a long way short of the billions required.


There remain important questions about extant energy strategies. Three main questions come to mind: how quickly can a transition from oil and gas to clean energy production and supply be achieved? How do extant strategies balance short-term needs with longer-term benefits (my assessment is that the latter are being sacrificed in favour of the former, i.e. there is a tension here)? How can private finance be deployed to make the kind of practical changes that are required?


Case study: The  Aidu wind farm

There is no absolute and certain answer to the first question concerning speed of transition. Just as an oil tanker takes a long time to change direction, so too does an oil and gas-based energy production and supply system take a long time to change – although the urgency of this transition has been ramped up by Russia’s invasion of Ukraine (as noted above), it will still take time (such is our dependency in the West on energy). Current transition strategies, consequently, have an urgency about them that pushes in the direction of already proven and available technologies (i.e. a mix of on-shore and off-shore wind, renewables, solar, hydro, nuclear and bioenergy). What is lacking in extant strategies is any real vision about what form energy production and supply may take in the future and the absence of (the kind of blue skies) research needed to explore and develop new energy sources (or, indeed, to significantly reduce demand). We may all come to rue our myopia in this regard.


This lack of vision, however, does not mitigate the need to take more urgent action to address our current energy needs. One such practical case study of a company taking such action is Eleon and its Aidu wind farm.


Eleon Green Ltd (“Eleon”) is an Estonian-based energy company established in 2007 that focuses on the development, construction and operation of wind energy and solar energy assets, green hydrogen production, energy storage, as well as wind turbines manufacturing that are used at the company’s wind farms. The company has three wind farms in operation, totaling 14 MW. The company has four wind farm projects under development, totaling approximately 1500 MW. By 2030, Eleon aims at producing 8MW of hydroelectricity, 1200 MW of wind power, and 415 MW of solar power.


In addition to its other projects Eleon is developing the Aidu wind farm. The Aidu Wind Park is located North-East of Estonia. The park is planned on 2,600 hectares of government owned land – formerly an oil-shale mine (designated brown field site). The Aidu Wind Park will become the largest wind farm in the Baltic region with 30 units of 3.4MW turbines.


The Aidu wind farm is key to Estonia's 'Green Turn' Framework, which aims to end electricity production from Shale Oil by 2035 and deliver long-term energy freedom by significantly reducing the use of non-renewables and imported fossil fuels. The project is being developed in partnership with the Estonian government and benefits from an Estonian State Subsidy at 53.7€/MWh for 12 years. Currently under construction Eleon is issuing a 12-year green bond that will provide funding to complete the 'shovel-ready' Aidu wind farm.


Eleon, its Aidu wind farm, alongside its other projects, is one example of how a company is making it real. For Estonia, for Eleon, part of the answer, at least, is definitely blowing in the wind.

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