Investors Learn Brutal Lesson From Sweden’s Wind Farm Woes

Located on a blustery plateau just south of the Arctic Circle in Sweden, Markbygden Ett became the crown jewel of Europe’s largest onshore wind development when it went online late last decade. Despite a long-term contract assumed to be safe, it became an expensive lesson in the dangers of making deals based on the predictability of energy prices — or the weather itself.

In the years since the 179 turbines started spinning, operator Markbygden Ett AB has racked up hundreds of millions of euros in losses and suffered a heavy reputational blow. That traces back to a critical misstep: signing a 19-year contract known as a power purchase agreement that included unrealistic expectations about how much electricity the farm would produce around the clock. When there wasn’t enough wind, or the turbines were offline, Markbygden Ett had to make up the difference by buying electricity on the spot market, where hourly prices are dynamically determined by availability.