Background
Currently, the commercial use of the Finnish exclusive economic zone (EEZ) is governed by international treaties and the Finnish EEZ Act. Under the current EEZ legislation, 20 exploration permits have been granted to developers of offshore wind projects to conduct seabed studies. Moreover, in total 17 applications for exploitation rights concerning partly overlapping areas have been submitted to the Ministry of Economic Affairs and Employment, all of which the ministry rejected in May 2024, because in the Ministry’s opinion, the current EEZ Act does not include sufficiently detailed provisions in relation to granting of such exclusive rights. Around the same time, the Finnish Government commenced a project with the aim to create functional and predictable regulation and administrative procedures that guarantee sufficient investment certainty for wind projects located in the EEZ.
Today, the government has submitted a legislative proposal for a new Act regarding offshore wind power projects in the EEZ to the Parliament. It is proposed that the new Act shall enter into force on 1 January 2025.
Purpose and goals of the new act
According to the proposal, the new Act aims to resolve current issues related to offshore wind farm projects in the EEZ, particularly concerning the determination of project areas and the selection of developers/operators in compliance with EU State Aid rules. The goal is to promote offshore wind energy in the EEZ as interest towards offshore wind projects in Finland is rising, and to establish a system that appropriately takes into account the interests of both developers/operators of offshore wind farms and the Finnish State.
A key objective of the proposal is to ensure that the process for granting offshore wind energy rights is fair, transparent, and predictable. The proposed law aims to align the regulatory framework of projects in the territorial waters with those in the EEZ. The intention is to avoid differences in policy unless there is a clear and justifiable reason for that.
Main features
In order to ensure that the use of the areas within the EEZ by various players is duly coordinated, the Government will, according to the submitted proposal, select the areas on which offshore wind farms may be located. Consequently, the new Act will not allow developers to apply for a right to use areas within the EEZ that they have identified as feasible.
The areas identified by the Government will be offered to the market in a competitive tender process organised by the Energy Agency, where the details of the project and the exploitation rights relating thereto will be included in the request for tenders. In the tender process, each bidder will receive points for both the price offered by it as well as certain quality factors to be set out in a government decree. The preferred bidder will be selected based on the price-quality ratio of the submitted tenders. The preferred bidder will have the right to apply for an exclusive right to exploit the tendered area for the development, construction and operation of an offshore wind farm. In practice, the exploitation right will be approved if it fulfils the criteria set out in the Act.
The exploitation right will grant its holder the right to develop an offshore wind farm and to apply for the necessary permits. In order to ensure that the legislative framework complies with international treaties binding the state, the right to place cables in the EEZ area outside the tendered area will be governed by the existing EEZ Act, which will be amended simultaneously with the enactment of the new legislation.
Further steps and HPP activities relating thereto
In parallel with the Parliament’s approval process of the Government’s proposal for the new legislation, the Ministry of Economic Affairs and Employment will prepare (a) decree(s) setting out more detailed provisions regarding e.g. the tender process and the exploitation permit application. In relation thereto, HPP has been engaged by the ministry to advise it in relation to the creation of instrument(s) enabling the developer of an offshore wind farm to use the project rights located in the EEZ as security for project finance obtained for the project. Moreover, as an active member of the Finnish Renewables Association’s Offshore Wind Committee, HPP is participating in the dialogue between the Ministry and the Finnish offshore sector with the aim to ensure that the Ministry is aware of the needs and drivers of the offshore wind developers.
