The rapidly growing prices of raw materials did not overtake the wind energy sector either - due to rising prices of metals, which account for as much as 90 percent. wind power turbines, the prices of the power plants themselves are also rising. However, this is not the only challenge facing wind farm developers – supply disruptions can lead to new wind energy projects being implemented much later than planned. This would also affect Lithuanian wind energy development plans. Calculating the currently developed projects, the installed capacity of wind power parks operating in the country until 2025. should reach 1.8 gigawatts (GW) when in 2021 at the end was only 660 megawatts (MW).
According to Gediminas Uloza, CEO of E Energija Group, which develops wind power parks in Lithuania, wind power plants can currently cost up to a third more than a few years ago. "Not only wind farms are becoming more expensive, but also their construction - in the last year, the prices of components needed for wind farms, such as cables, as well as foundations, substations and roads, have risen. According to a preliminary calculation, the kind of wind farm we started building in 2020. In the Telšiai district, it would now cost up to 30 percent.
He is supported by the representative of the wind turbine manufacturing company Siemens Gamesa - at the moment, representatives of the wind energy sector are suffering from an unstable market.
"Wind power plants have become more expensive and it seems that their prices will continue to rise in the near future. This is a consequence of what is happening in the market: manufacturers are faced with higher prices for raw materials and delayed, longer deliveries due to a disrupted supply chain. In addition, in order to maintain the interest of interested parties - investors, shareholders - in the renewable energy market, it is necessary to maintain price growth. Without receiving or receiving less dividends, they may turn away from renewable energy, then it would be difficult to achieve the goals of energy transformation and the green course", says the company's regional technical sales manager, Edwin van der Voort.
Deliveries are delayed
The challenges faced by the manufacturers of wind power plants also cause concern for the developers of wind power parks - in addition to rising prices, they also have to accept the lengthening of the implementation of orders for wind power plants.
"Earlier, when we ordered wind turbines, we received them within 12 months, now the deadline is approaching 24 months. We have to wait longer not only for wind turbines, but also for their components - cables, fittings. Due to supply stagnation, a number of wind power parks planned in Lithuania may not be implemented on time," comments G. Uloza.
According to Justas Kairis, a representative of the "International Logistics Center" who carries out cargo logistics, the logistics of wind power plants is also not easy - not all ships can transport turbine blades over 60 meters long. "The number of cargo ships capable of carrying wind turbines can be counted on the fingers of one hand. Parts of power plants have to be transported from different countries - it is very rare that the complete order is taken from one place. More common cases are when one part needs to be taken from Holland, another from Spain, and the third from Germany. Wind power plant parts brought to Lithuania are assembled and stored according to the established procedure, we have an unloading plan for that," J. Kairys explains the nuances of wind power plant transportation.
The increased freight rates have also affected the logistics of wind power plants - last year's calculated power plant transportation rates no longer correspond to current prices.
"Freights paid to ship managers for cargo transportation grew 2-2.5 times in our region, and were 3 times higher at the peak. Cargo and transportation rates also grew. Rising fuel prices also had an impact on the cost of logistics. Since there are not many ships capable of transporting wind turbines, there is less competition here than in the market of ordinary cargo, where seasonality has a greater influence on transportation rates," says J. Kairys.
New taxes can also increase prices
Director of the Lithuanian Wind Power Association (LVEA) Urtė Daškevičiūtė assesses the rising tension in the wind energy sector cautiously - renewable energy is more important than ever, but due to the rising prices of wind power plants and logistical challenges, the price of electricity may also increase. However, even if this were to happen, renewable power plants would be economically more attractive than fossil fuel-fired ones.
"Developers of wind power parks, who started new projects a few years ago, could not predict such price jumps and changes, so most projects not only become significantly more expensive, but their implementation also stalls. Rising costs will inevitably affect consumers of renewable energy. Challenges arise for developers due to the lack of necessary specialists, bureaucratic obstacles and still sometimes unfavorable attitude towards the development of wind energy, even though it is one of the guarantors of Lithuania's energy independence", says U. Daškevičiūtė.
For this reason, the "Breakthrough Package" prepared by the Ministry of Energy and currently being discussed in the Seimas, which is supposed to stimulate the development of wind and solar energy in the country, is extremely welcome. However, there is still a lack of clarity as to how it will be implemented in practice and how it will affect the parks previously developed in Lithuania.
The Breakthrough Package is favorable to developers planning new wind farms. Meanwhile, those who have started or even half-finished projects are uncertain about how these wind power parks will need to be further developed - according to the old or new order. It is not known whether the laws will ultimately provide for a clear transitional period, or whether developers will have to redo and coordinate what has already been done, for example environmental impact assessment, agreements with local municipalities and communities", comments G. Uloza, head of the "E energija" group .
The additional production tax planned to be applied to the developers of wind power parks provided in the "Breakthrough Package" is also being carefully evaluated. It would benefit local communities, but it could also contribute to an increase in the price of electricity, which would be felt primarily by end users.
According to U. Daškevičiūtė, the fact that wind power producers share their success with local communities is very good, but in order for the tax burden not to increase significantly, other taxes applied to wind energy should be proportionally reduced. In addition, although wind farms are planned to be taxed additionally, it may happen that some solutions, such as greater distances from homes to wind farms, will make the development of wind energy more difficult.
"We should fundamentally promote the development of wind energy - eliminate bureaucratic obstacles and transportation fees, accelerate the issuance of permits for the construction of wind power plants and focus on increasing the capacity of the country's electricity grids and the development of energy storage. Only having enough or more than needed electricity can ensure a lower price for it, which would benefit everyone," says Edwin van der Voort.
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