Onshore Wind Energy Market Analysis of Sweden, Poland, and Romania Marta D’Angelo Master of Science Thesis KTH School of Industrial Engineering and Management Energy Technology TRITA-ITM-EX 2020:469 Division of Heat and Power Technology SE-100 44 STOCKHOLM Master of Science Thesis TRITA-ITM-EX 2020:469 Onshore Wind Energy Market Analysis of Sweden, Poland, and Romania Marta D’Angelo Approved Examiner Supervisor Björn Laumert Rafael Eduardo Guédez Mata Commissioner Contact person Abstract The shift towards sustainability is a key point in many countries’ energy programs. Among renewable energy technologies, wind power offers high productivity and reliability. However, its profitability is strongly dependent on the support of favorable political environment, national and/or European incentives, and market opportunities. With this regard, this study presents a methodology to highlight how different scenarios impact on the remuneration from similar featured wind farms. Indeed, a wind farm pre-feasibility study is performed in three different locations in Sweden, Poland, and Romania respectively. Both technical and economic results are compared, and conclusions are carried out. First, a study defining detailed country profiles is performed by focusing on wind energy current scenario and development of future scenarios. Key investment actors and business models are analyzed in order to define market opportunities and criticalities. This research is crucial and preliminary to choose proper features and realistic assumptions for the pre-feasibility wind projects. Therefore, the first results come from these market analyses which outline various bottlenecks in the countries energy systems. Specifically, the Swedish permitting phase is affected by the local “municipal veto” which sets limits on the wind turbines height. The biggest barrier in Poland is the “10H rule” imposing strict distances between wind farms and houses. Lastly, the most relevant Romanian issue is the grid capability which needs to be expanded in order to accommodate the desired renewable energy capacities. The first assumptions of the wind farm designs aim at overcoming these criticalities, by choosing a wind turbine model with acceptable height and rotor diameter and assuming approved permits. Finally, the research continues with the design of three 100 MW wind farms located in sites with similar annual average wind speeds. Thus, techno-optimizations lead to the final layout orientations by minimizing wake effects. Hence, the economic analysis shows that the wind farm located in Romania has higher productivity and profitability, followed by the Swedish and the Polonian wind farms. However, the comparison study exposes another relevant difference. The Swedish and Polonian assumptions on the permitting phase are related to political rules already planned to be modified or removed uniquely, such as the municipal veto and 10H rule. On the contrary, the Romanian barrier regards a grid expansion involving huge investments along with political decisions. In conclusion, given that the three pre-feasibility projects are already cost- effective, the profitability of the projects raises along with decreasing of investment costs from the technical side, and implementation of necessary amendments from the political one. I Sammanfattning Förändringen mot hållbarhet är en nyckelpunkt i många lands energiprogram. Bland teknik för förnybar energi erbjuder vindkraft hög produktivitet och tillförlitlighet. Lönsamheten är dock starkt beroende av stödet av gynnsam politisk miljö, nationella och / eller europeiska incitament och marknadsmöjligheter. I detta avseende presenterar denna studie en metodik för att belysa hur olika scenarier påverkar ersättningen från liknande vindkraftsparker. I själva verket genomförs en genomförbarhetsstudie på vindkraftsparker på tre olika platser i Sverige, Polen respektive Rumänien. Både tekniska och ekonomiska resultat jämförs och slutsatser genomförs. Först utförs en studie som definierar detaljerade landsprofiler genom att fokusera på vindkraftsströmsscenario och utveckling av framtida scenarier. Viktiga investeringsaktörer och affärsmodeller analyseras för att definiera marknadsmöjligheter och kritik. Denna forskning är avgörande och preliminär för att välja lämpliga funktioner och realistiska antaganden för förberedande vindprojekt. Därför kommer de första resultaten från dessa marknadsanalyser som beskriver olika flaskhalsar i ländernas energisystem. Specifikt påverkas den svenska tillåtningsfasen av det lokala "kommunala vetot" som sätter gränser för vindkraftverkets höjd. Den största barriären i Polen är ”10H-regeln” som innebär strikta avstånd mellan vindkraftsparker och hus. Slutligen är den mest relevanta rumänska frågan nätkapaciteten som måste utökas för att tillgodose önskad kapacitet för förnybar energi. De första antagandena om vindparkens utformningar syftar till att övervinna dessa kriterier genom att välja en vindkraftverksmodell med acceptabel höjd och rotordiameter och antaga godkända tillstånd. Slutligen fortsätter forskningen med utformningen av tre vindkraftsparker på 100 MW belägna på platser med liknande årliga genomsnittliga vindhastigheter. Således leder teknooptimeringar till den slutliga layoutorienteringen genom att minimera väckningseffekter. Följaktligen visar den ekonomiska analysen att vindkraftsparken i Rumänien har högre produktivitet och lönsamhet, följt av svenska och polska vindkraftparker. Jämförelsesstudien visar dock en annan relevant skillnad. De svenska och polska antagandena om tillståndsfasen är relaterade till politiska regler som redan planeras att ändras eller tas bort unikt, till exempel kommunvetoret och 10H- regeln. Tvärtom gäller den rumänska barriären en nätutvidgning med stora investeringar tillsammans med politiska beslut. Sammanfattningsvis, med tanke på att de tre projekten för genomförbarhet redan är kostnadseffektiva, ökar lönsamheten för projekten tillsammans med minskade investeringskostnader från den tekniska sidan och genomförande av nödvändiga ändringar från den politiska. II III Acknowledgements I have always been tempted by new experiences, countries, and environments because they are challenges inspiring me to do better. Therefore, it was not a surprise when I figured out that also my master thesis research would have led to a change in my life. During the last year of my Master Program’s at KTH, I have come into contact with Enel Green Power for the opportunity to get an internship. I got passionate about this company’s world, activities, and the huge market it is part of. As for me, developing a master thesis with Enel meant also coming back to Italy after three years abroad. Leaving Stockholm, my friends, and my Swedish life was the first challenge I faced. Second, being part of an industrial reality for the first time was strongly inspiring and stimulating. Now, with this experience behind me, I feel lucky because it was the best way to close the wonderful cycle of my Master’s. My first acknowledgement is addressed to KTH and, more intensity, to Rafael Guédez for being first a great professor and subsequently for following me as supervisor of this project. Since the first time I followed one of his lectures, I have been captured by his proficiency, enthusiasm, and passion. Then, during my thesis research I appreciated his support and precious advices, measure of his great experience and helpfulness. I am very grateful to Enel Green Power and every person I had the pleasure to meet during these months. I am truly glad for having worked with Violeta Angelova. Her competence, availability, and kindness made me feel free to ask and clarify every doubt I had, and I was 100% sure to receive the best answer I needed always. Moreover, I am thankful to Andrea Panizzo and Marcello Pasquali for having me suggested the best thesis project I could have ever desired. They have advanced a thesis which fits perfectly with me by only thinking about my student experiences, my skills, and interests. It is difficult to explain how much I appreciate their attention to detail in my project and their help from the very beginning until the presentation day. Finally, I am thankful to my family and friends. Every word I can write here is nothing compared to the role they have in my life. They are part of every choice I make. They face every challenge with me, even without knowing it. They are part of my huge luggage directed to every place I travel. Thank you because I have never even felt one kilometer of distance. Marta Rome, September 2020 IV V Table of Contents Abstract I Sammanfattning II Acknowledgements IV List of Figures and Tables 1 Abbreviations 4 About the Report 5 1. Introduction 6 1.1 Background 6 1.2 Delimitations 6 1.3 Purpose and Method 6 2. Technical Background 8 2.1 Wind Energy Overview 8 2.1.1 Wind Energy in the World 8 2.1.2 Wind Energy in Europe 9 2.2 Technical Aspects 10 2.2.1 Wind Farms Asset 11 2.2.2 Wind Turbines Components 12 2.2.3 Current Status of the Technology 14 2.2.4 Technical Challenges and Innovations 16 2.3 Market Analysis 17 2.3.1 Key Mechanisms in National Renewable Energy Support Policies 17 2.3.2 Power Purchase Agreements (PPAs) Business Model 19 2.3.3 General Market Criticalities and Drivers 20 3. Sweden 22 3.1 Country Profile 22 3.1.1 Energy Insights 22 3.1.2 Electricity Market 25 3.1.3 Country’s Policy Objectives 27 3.2 Onshore Wind Energy 28 3.2.1 Wind Plant Current Installations 28 3.2.2 Wind Energy Scenarios 29 3.2.3 Wind Power Permitting Process 31 3.3