Giant RAS project turning Sweden into aquaculture hotspot

Sweden has never been in the conversation when it comes to naming global hotspots for aquaculture.

But Roy Høiås, the owner and CEO of Lighthouse Finance, a prominent player in funding all sorts of projects supporting the global seafood industry, has grand ambitions for his neighboring country to the east – and, in particular, the Municipality of Sotenäs, a waterfront town on the Skagerrak Strait, about a 2.5-hour drive south from Oslo.

In March 2020, Høiås appeared at a press conference with local officials and representatives of the Swedish government to announce the creation of Quality Salmon, the centerpiece of a massive project designed to create a “true circular industry” around land-based salmon farming. The goal, Høiås said, was nothing less than to create the most modern salmon aquaculture facility in the world.

The new fish farm complex will span 75 hectares, making it the largest in Europe, and create around 2,000 jobs, Sotenäs Municipality Board Chairman Mats Abrahamsson said at the March event. Abrahamsson estimated the cost of the project at between SEK 17 billion and SEK 20 billion (USD 1.6 billion and USD 1.9 billion, EUR 1.5 billion and EUR 1.8 billion). The design for the recirculating aquaculture system (RAS) farm includes two 40,000-metric-ton (MT) farming facilities, and a third with a capacity of 20,000 MT. Additionally, the project also includes feed production and processing plants, a byproducts biorefinery, a wastewater treatment facility, a solar energy plant, and other auxiliary services designed around an “integrated industry solution [that] paves the grounds for the highest salmon quality and lowest operating cost the market has seen in high-volume production,” according to Høiås.

“When I proposed the idea, I never thought they would go for it. It was huge – way beyond the size they expected,” Høiås said, referring to Abrahamsson and the other local officials who have backed the project. “I was wrong. Everyone was on board, even the different political parties who never agree on anything gave it the OK."

In an interview with SeafoodSource, Høiås said he was initially approached by Sotenäs officials interested in building a RAS facility with the capacity to grow 10,000 metric tons of salmon. He responded by asking them what their goals were for the project.

“They started out saying they had some free property and they wanted to bring in an industry to create more jobs and develop the local economy,” Høiås said. “People were moving away and it was becoming a summer vacation area. Their feeling was, they had the property but they needed to find a way to create an environmentally sustainable industry providing year-round employment opportunities.”

But Høiås saw the amount of property available at the site – around 1.4 million square meters – and dreamed bigger.

“Just setting up [a] 10,000-ton [facility], that’s not big enough to attract other parts of the industry. You’re talking about maybe 40 people employed,” he said. “So I began talking to them about the idea of a circular industry model, which if they wanted a sustainable industry, would be much better. We started from the other side of the paper. I went back and did some thinking with several of my clients, including farmers and processors, and we thought about what numbers we would need to make it work. We saw very fast if we have the size of the property they had, we could create a true circular industry model in Sotenäs. So we pitched it to them, and they said, “That’s the way we want it. How can we do that?’”

After receiving the initial go-ahead, Høiås approached executives of a few feed producers he was familiar with.

“I asked them, 'If you were to go into a package like this, what is the ask of the volume you would need to build a plant there?' I knew the ballpark would be around 70,000 to 100,000 tons of feed every year, but they said, ‘If you can do it in a way where the circular industry model gives us a huge competitive advantage in the way we produce and deliver the feed, that erases our logistics and delivery issues, and allows us to plan for a stable production of feed over 12 months a year, that’s going to be a very interesting case for us.’ From that, they gave me the starting number of 100,000 to 130,000 tons of feed. With that much feed, we determined the number of fish we would need to produce is around a 100,000-ton capacity,” Høiås said.

With that, the project began to take shape, Høiås said, as he reached out to potential partners and eventually landed agreements with several, including iCell, a Chinese company that has developed a single-cell protein that performs water cleaning and nutrient recovery in recirculating aquaculture systems; green energy provide Vattenfall, which agreed to construct a 40-megawatt photovoltaic plant, energy storage facilities, and EV charging capabilities and stations; and Siemens, which will provide a digital enterprise solution that will maximize automation and synergies across the entire project.

“It is a new establishment of an area with great growth potential from both an environmental and market perspective,” Siemens Factory Automation and Digitalization Head Michael Kraft said upon signing a letter of intent with Quality Salmon in June 2020. “The fishing industry is growing and changing, which requires developing and putting into operation new solutions. We at Siemens will be able to contribute with digital solutions and intelligence in the buildings and we are proud to be a part of this.”

Additional partnership announcements came this summer and fall as RAS system builder AquaMaof, feed producer BioMar, equipment provider BAADER, and processing firm Sekkingstad, a division of Trient AS, each signed on as partners.

“We are excited to be selected for this opportunity,” Trient AS CEO Bård Sekkingstad said in an October press release. “We are well experienced with processing and sales of salmon, but land-based salmon is new to us. It is still an early phase, but we believe that land-based salmon can be a good supplement to the great sea-based farmed salmon from Norway. Through Quality Salmon's industrial park, our fish processing will be part of Europe's largest zero emissions, blue-green salmon farm. In addition, we get opportunities to develop new collaborations with other players in the industry and with other partners that contribute with innovations and technology development.”

By tying so many partners together before the project has even broken ground (a milestone expected later in 2021), Høiås said it will be possible to embed environmental, social, and corporate governance (ESG) principles into every facet of the project, ensuring it meets the municipality’s green mandate.

“It will be built with ESG principles at its core – ensuring green energy usage towards a CO2 positive footprint, zero waste, and zero emission to the sea,” he said.

Høiås said one indispensable role the project remains unfilled – the company or companies that will farm the salmon. Quality Salmon is described as the industry facilitator and industry park host, but will not be involved in farming operations, he said. Thus far, Høiås said he has approached three prominent salmon farmers to inquire about their interest, offering them a long-term rental contract for the facility and the industry connections to build out a viable farming operation. Høiås said talks are advanced, but did not named the companies best-positioned to participate in the project.

“We realized that to be able to run a park like this, we will never find one player that can take that on,” he said. “The closest [Lighthouse] client who can take that on is Cooke Aquaculture, which is one of our biggest clients and we know them well, but obviously for them to take on a huge project like this is probably not very likely. It’s a working-capital intensive industry and that is a huge step into what would be a new type of operation for them.”

Altering his approach, Høiås said he is now pursuing a piecemeal strategy for attracting farming firms to the project.

“We have three players planning on dividing the total capacity of 100,000 tons between them. One is talking 50,000 [tons], the second will take 30,000 [tons], and the third will take 20,000 tons. That way, we de-risk the farming volume by getting three of the best farmers we know to join in and take responsibility for the biomass,” Høiås said.

For its part, Sotenäs Municipality is providing “very good terms” on the land lease and has promised accelerated reviews and approvals in the permitting process – a promise that has also been given by the Swedish government, Høiås said.

The last – and perhaps most important piece of the puzzle – is establishing a market for the massive amount of salmon that will produced in Sotenäs. On that issue, Høiås is confident that the salmon’s origin in Sotenäs will give it numerous advantages in the marketplace. As Sweden lies within the European Union, it faces fewer trade and tariff barriers than salmon from Norway, and its geographic location offers Quality Salmon a logistical advantage in accessing the European market. Furthermore, Sweden has a strong trade agreement with China and a free trade agreement with Russia. And Sweden imposes no taxes on salmon farming, unlike Norway, and its building, operating, and human resource costs are significantly lower than Norway as well, according to Høiås.

Lastly, the circular economy model driving the Sotenäs project itself offers significant cost savings over other models of salmon farming. As the glue ensuring the various deals he’s signed will stick, Høiås said he demanded 25-year commitments from all partners in the project.

“We’ve told people, we all need to live by the statement that will not build anything unless each supplier who is contributing to the project has a stake in the game and understands they’re playing an integral role in an innovative industry development that depends on their long-term participation in the circular model,” Høiås said. “We have put that together.”

Photo courtesy of Municipality of Sotenäs