The profitability of Swedish wind farms is lost – Terrible losses and bankruptcies threaten

According to the report, the growth of wind power companies’ turnover has stopped and even decreased last year, even though the nominal capacity of wind power has increased both in Sweden and in Finland. According to the researchers, this indicates a clear price erosion, which is also visible Nord Pool in price quotations.

Researchers calculate that wind power companies in Sweden made a loss before taxes of no less than 6.5 billion kroner (590 million euros) with a turnover of 12.3 billion kroner (about 1.1 billion euros) last year.

It’s not even one year. The researchers calculate that the wind power companies as a whole would not have made a positive profit before taxes in a single year after 2017, although the individual company differences are of course significant.

Continuous growth cannibalizes the result

At the same time, however, the nominal capacity of wind power has grown significantly.

In Sweden, as in Finland, the message about wind power has been that it currently produces the cheapest electricity on the market.

The increase in capacity seems to be cannibalizing the wind power industry significantly in Sweden, while electricity consumption has not grown as predicted. The losses are particularly concentrated in Sweden’s most important wind power and at the same time most important electricity production area, Norland (SE1 and SE2 areas of the Swedish electricity market), where, in addition to wind power, there is plenty of hydropower available.

The Norlan area is the cheapest electricity production area in Sweden and at the same time in Europe, where the average price of stock exchange electricity for the whole year without tax was 2.5 cents per kilowatt hour last year and this year it has been only 1.6–1.7 cents per kilowatt hour.

According to the report’s authors, the losses are even more evident in southern Sweden, where wind power has been built earlier than in northern Sweden.

A critical scholar

A Swedish economist and well-known critic of the green transition in the country by Christian Sandström and business economics Christian Steinbeckin written report on the profitability of wind power was published National Economic Association in the publication series.

Sandström has been a well-known critic of green investments in Sweden, who has studied above all the profitability of projects.

The wind power industry has previously criticized Sandström’s calculations as being too purposeful and drawn up with too short a scope. Projects can be profitable in the longer term.

The number data in itself has not been claimed to be wrong, and it must be difficult because the researchers have taken the numbers from the companies’ financial statements.

Instead, Sweden’s own wind power association by Tomas Hallberg criticism in Dagens Nyheter is right in that if the effectiveness of the projects were evaluated over a longer time span, the situation could be more positive.

This is explained by the fact that the depreciation of wind power companies is faster than normal in Sweden. Depreciation is often done in 15 years, even if the lifetime of the wind turbine is 25–30 years. In this way, the ability to make a profit improves in principle automatically when the depreciation is done.

Of course, it also matters from which part of the result line the readings are taken. The researchers use as a starting point the profit before financial statement transfers and taxes, which also includes the financial costs of companies, which can be very heavy in projects.

In a project like wind power investments, this is a completely justified way of studying the profitability of the projects, and the situation is reflected in the result lines.

Explanations do not change the message of the study

The researchers’ sad message is not really changed by the considerations of the Swedish wind power industry. Sandström and Steinbeck have gone through a huge material that covers 3705 wind turbines, whose estimated annual electricity production last year was 40.6 terawatt hours, or almost half of what Finland consumed last year.

According to the Swedish Energy Agency, the estimated annual production of all installed wind turbines was 48 terawatt hours last year, the researchers write. The analysis therefore includes approximately 85 percent of Sweden’s estimated annual total wind power electricity production.

What will happen next? According to the researchers’ view, bankruptcy is already threatening several wind power companies, especially in Norland, and at least the companies must be constantly recapitalized, either by the owners or by lenders. They ask, what are the motives for continuing to finance the operation, if the operation seems to be more or less chronically short of money.

We should have answers to this by next year at the latest.

Sandström and Steinbeck’s report was the first to report Affärsvärlden-lehti.