Interview: Vattenfall’s head of wind Gunnar Groebler

Swedish utility Vattenfall has been at the leading edge of some of the most important trends in European wind in recent years.

It is on track to deliver the first zero-subsidy offshore wind farms, won the first corporate power purchase agreement offshore, and is now working to pair wind with other technologies in hybrids.

Yet despite the bold plans, A Word About Wind found Vattenfall’s wind head Gunnar Groebler in cautious mood when we met at the annual conference of WindEurope – where he is chairman – in Bilbao in April. He says it was good that there is fast progress to drive down the cost of wind energy, but warned the sector against moving too fast.

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“Subsidy-free doesn’t mean policy-free”‍

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“The market is so dynamic. Who’d have thought in 2015 that, by 2018, we have the first zero-subsidy [offshore] bids on the table? They still need to be delivered but, by 2022, we, Vattenfall, are going to be the first to have the first zero-subsidy offshore wind farms spinning.”

This honour is set to be taken by Vattenfall’s 700MW Hollandse Kust Zuid 1 & 2 in Dutch waters, which are due to complete in 2022.

Vattenfall is also bidding in the 750MW Hollandse Kust Zuid 3 & 4 auction that closed in March. Groebler says he is concerned about the talk of ‘negative bids’ – where the winning bidder pays a tariff to government for the contract – in that auction, and the impact they could have on the offshore wind sector as a whole.

“Let’s be a bit careful. None of the zero-subsidy projects has been delivered yet, and we have to be careful that we don’t over-stretch, especially the supply chain, as they need a bit of time to adapt to the new situation. Tight interaction with first line of suppliers, like turbine or foundation manufacturers, is absolutely necessary to succeed, but they have their sub-suppliers who need a bit of time to get the new coast approach trickling down,” he says.

Groebler says that rapid falls in the cost of offshore wind cannot continue indefinitely, and adds that the industry still needs clarity from governments about future tenders: “Subsidy-free doesn’t mean policy-free,” he says. “You need a forward looking framework to support the ultimate political and public ambition to further decarbonise the industry.”

This holds true for corporate PPAs too. Vattenfall won the first corporate PPA at an offshore wind farm last summer with Novo Nordisk and Novozymes, at its upcoming 600MW Kriegers Flak project, but the sector cannot rely solely on this type of deal.

Groebler was also sceptical of ideas expressed at the launch of our European PPA Trends report in March that wind farm owners should sign PPAs now with the idea that they might renegotiate them: “An offshore wind farm is a €1bn investment that you need to run for 30 years in a profitable way. Running into PPAs that will need to be renegotiated anyway? There’s no point.”

This is equally true for one of Vattenfall’s high-profile onshore projects: the 353MW Blakliden Fabodberget in Sweden, in which it owns a 30% stake alongside Vestas and Danish pension fund PKA and which has a PPA with Norsk Hydro. Its other big wind farms onshore include the 300MW Wieringermeer project in the Netherlands.

The growth of hybrids‍

Groebler says that wind is central to Vattenfall’s strategy but, of course, it is far from the company’s only source of generation.

The company also runs biomass, coal, gas, hydro, nuclear and solar projects, but committed in 2015 to speed up the phaseout of the carbon-dioxide-heavy parts of its portfolio. It did this alongside its pledge to double installed wind farms to 4GW by 2020, and the utility now wants to hit 8GW by 2023.

This has been supported by a restructuring of the company in 2017 that means the company has a team, led by Groebler, focused on wind as well as solar and storage.

“Having end-to-end responsibility in certain businesses helps you to focus and to deliver in a much smoother and more powerful way,” he says.

It also gives Vattenfall an option to pair wind with technologies such as solar, storage and hydrogen. Groebler says Vattenfall is looking at how to use these combinations to decarbonise sectors including heavy industry, heating and cooling in buildings, and transport: “We’re going to have more of those in the future,” he says, adding that the hybrid systems will also open up new revenue models for companies in the sector.

This plays into a wider move within Vattenfall to look at how it is financing projects.

“In the past, we only looked at own-balance-sheet financing on a corporate level, and now we’re opening up and finding different models,” Groebler says. “What’s important to us is commissioned capacity, which leaves optionality and flexibility on who then ultimately owns the assets. It doesn’t mean we go in full force into project financing and all kinds of fancy financial instruments, but it at least opens up the discussion.”

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However, that growth of commissioned capacity cannot simply come from desire of those in the wind industry. If it did then the industry would not have slipped, in 2018, to its lowest level of installations in Europe for a decade, according to statistics from WindEurope.

Groebler says that companies in the wind sector rely on countries in the European Union setting out a clear direction for renewables in their national energy and climate plans. These are due with the EU by the end of 2019 but progress is slow, and this could mean the EU misses its target of 32% renewables in the energy mix by 2030.

“Those plans need further discussion and firming up because, right now, there are lots of ambitions and headlines but we’re lacking the activity level underneath,” he says. If Vattenfall is to continue making good on its ambition to continue growing in wind then that clarity will be key.