The Nordics are set for a new phase of structural growth in electricity demand with expected realization of green steel fabrication projects that can trigger a significant shift in the regional market landscape, according to the latest “Nordic Long-Term Market Outlook – 2050+’ from StormGeo.
Expansion of fossil-free steel production using green hydrogen generated by electrolysis has taken a big step forward with developer Stegra recently securing key financing for its proposed 700MW plant in Boden, northern Sweden.
“This brings the project a big step closer to maturity and can set the stage for other similar projects being developed,” said Sigbjørn Seland, Chief Analyst at StormGeo. “Together with rapid expansion of AI data centers in the region, this can significantly boost local electricity consumption.”
Improving wind project economics in the north can reduce the price gap with the southern zone where project development has been hit by permitting issues and local opposition, despite historically stronger market fundamentals and higher prices.
The business case for renewables development in the Nordics has been further strengthened by recent geopolitical instability that has raised fossil fuel supply risk, as well as prices.
Onshore wind is seen as the prime focus for expansion due to its low cost and scalability, while offshore wind needs subsidy support – with Denmark most proactive – and nuclear build-out is mainly seen in Sweden.
“Abundant renewable resources in the Nordics allow low-cost and low-carbon power generation to be secured at the domestic level, increasing regional security of supply,” Seland said.
But the report states that capacity expansion hinges on opportunistic investments in a complex and fragmented market landscape, with future investments likely to be dictated by demand location and regional price dynamics. StormGeo analysts also envisage new financing models, such as compensation mechanisms, to facilitate onshore wind development in Norway and Sweden.
“Resource availability is now not the issue,” Seland said. “The key challenge to capture value is to convert this potential into realized capacity in the right locations and at the right price.”
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