(Bloomberg) -- Swedish wind developer OX2 AB expects it will take about three years to reach a final investment decision for a major offshore park as the industry reels from higher costs and interest rates.

“My guess is that this will be among the earlier European offshore sites now to announce a final investment decision,” Chief Executive Officer Paul Stormoen said in an interview in Stockholm. His company is planning a 400-megawatt project off the nation’s west coast known as Galene, for which it received a government permit in spring, and is now talking to suppliers and power grid Ellevio AB about a connection.

Stormoen expects Galene to be part of a new wave of projects that is heavily influenced by the aftermath of Russia’s invasion of Ukraine and the ensuing energy crisis. Soaring material prices and higher financing costs offer a sharp contrast from conditions seen only a few years ago.

“You need that kind of dust to settle,” he said. “Make sure that everyone’s comfortable, that this will be a price environment that we can live in for the duration of the lifetime.”

State-owned utility Vattenfall AB, which got a permit for another site at the same time as Galene, said in October that costs for developers have soared as much as 40% in the past 12 to 18 months. 

There are a few final hurdles still to be overcome for OX2. The park’s Natura 2000 permit, an environmental license, is currently under appeal, the firm said. Cable permits are expected to get the green light in the first half of next year. 

Even once a project is fully approved, it might still take many years to reach financial close, said Luisa Amorim, an offshore wind analyst at BloombergNEF in London.

While Sweden has some smaller offshore wind parks already, Galene and Vattenfall’s Kattegatt Syd project would be the first modern ones with turbines as tall as skyscrapers. If built, they will help supply southern Sweden, flagged by European grid group Entso-e last year as one of the regions most in danger of power shortages after nuclear reactor shutdowns in recent years.

Galene will generate about 1.5 terawatt-hours per year. The investment is expected to cost about 10 billion Swedish kronor ($960 million) and the firm predicts it will be up and running late this decade. Ingka Investments, the investment arm of Ikea’s biggest retailing group, holds a 49% stake. 

Investor confidence in the broader industry has taken a hit after major project delays and writedowns in the UK and the US. OX2 has lost almost half of its market value this year, after a 49% gain in 2022. 

But Stormoen remained upbeat, after last week announcing that operating profit will be about 1 billion kronor, compared with 624 million kronor in 2022.

“We’re doing well operationally, I think there’s a bit of a misunderstanding of what we can do to create value,” he said. “This year we have not started as much onshore construction, meaning that we have pushed a bit of portfolio over to next year. So nothing is lost.” 

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