Offshore wind should be seen as a joint European resource

DISCLAIMER: All opinions in this column reflect the views of the author(s), not of EURACTIV Media network.

The offshore wind strategy, published in November, aims for 25-fold growth in offshore wind capacity [Thomas G / Pixabay]

The European Commission’s aim of 300 GW of offshore wind capacity exceeds the needs of coastal states, so countries need to work together to hit this target and achieve the full potential of offshore wind, write Zsuzsanna Pató and Michael Hogan.

Zsuzsanna Pató and Michael Hogan are senior advisors at the Regulatory Assistance Project (RAP), an independent, non-partisan, non-governmental organisation dedicated to accelerating the transition to clean energy.

Offshore wind is a special resource. The fact that there is little legacy infrastructure, coupled with the impressive European ambition of expanding the current capacity of 12 GW to 300 GW by 2050, raises an important question: how can we develop only the minimum infrastructure needed, at the lowest cost, and operate it to the maximum benefit of European consumers?

The answer lies in utilising this resource collectively.

To have any chance of exponentially increasing offshore wind capacity in time for the 2050 net-zero decarbonisation goal, we need to move beyond approaching offshore energy as a coastal state resource, beyond even approaching it as a regional resource at sea-basin level.

Simple arithmetic tells you that 300 GW clearly exceeds the needs and wants of the coastal states themselves, individually or collectively. It is therefore at best doubtful that they would develop the necessary offshore infrastructure in a sufficiently timely or coordinated fashion.

The cost of the technology has decreased to the point that private money is willing to build wind parks without direct public financial support.

The prospect of exploiting wind over the seas at this scale, however, presumes one major prerequisite – developing the offshore grid that would gather offshore energy production and deliver it to where it is needed. This is the crux of the offshore wind success story.

The current practice of coastal states linking wind parks to their onshore power system one by one is not nearly as effective as more cooperative solutions. The European Commission acknowledges this in its recent offshore renewable energy strategy (the strategy), which calls for the collaboration of all parties concerned.

So, how cooperative would we need be to have 300 GW by 2050? We should consider offshore wind as a joint European resource and opt for joint governance every step of the way.

Joint planning

Each element of the offshore grid needs to be built with a masterplan of a fully developed, meshed grid in mind. The strategy refers to the need for anticipatory investment and envisions setting offshore wind capacity targets for each seabed and cooperating to define suitable locations for industrial marine energy development.

No framework for incentivising anticipatory investment would work as efficiently as a jointly developed masterplan that optimises the value of each component towards developing the overall resource whilst considering environmental and other use limitations.

Joint development and financing

The default case for transmission development is that it be planned and built by a single incumbent transmission system operator (TSO) or two neighbouring TSOs. This approach is problematic for three reasons.

First, it runs the risk of coordination problems because the value of investment in new offshore grid elements is dependent upon the timely completion of other elements developed by other TSOs.

Second, the entire grid can be built quicker and cheaper if its components are awarded competitively in packages of discrete grid elements.

Third, putting together the puzzle of nationally financed grid elements is likely to create an offshore grid where various otherwise similar joint-use elements have different development costs, depending on the national TSOs’ remuneration schemes, regulatory context, ownership and costs of capital.

Additionally, this would constrain and delay development by making it reliant on the financing capacity of individual TSOs in each of the individual coastal states.

The strategy shines a light on these problems. It refers to the UK’s offshore transmission operator regime as a potential alternative to TSO-led grid development.

Wind farm developers have the option of designing and constructing offshore connections or enlisting an offshore transmission operator to do so. Regardless of who builds the assets, the offshore transmission operator will be responsible for the ongoing ownership and operation of the connections.

The strategy also recognises the financing gap and suggests the use of various EU funds for enhancing both offshore and connected onshore network development.

More importantly, it suggests the use of the EU renewable energy financing mechanism for additional funding.

This mechanism allows Member States to finance renewable projects anywhere in Europe – in addition to domestic and bilateral cooperation projects – with the primary intention being to fill the gap in ambition between individual countries’ contributions and the 2030 EU renewable target.

Member states pay voluntary financial contributions into the scheme, which will be used to tender support for new renewable energy projects in all member states willing to host such projects.

The strategy, however, fails to take the final step of bringing the construction and the financing of the offshore grid under the joint governance framework that would be required to tackle these barriers.

It is one thing to say that any member states can finance one or more offshore wind parks, but it is quite another to consider the complex undertaking involved in creating the offshore grid that would make best use of the wind parks possible in the first place.

A joint framework would mean that any member state could contribute to the financing of offshore renewable energy grids (and procure generation) through EU auctions, e.g. the EU renewable energy financing mechanism, and receive renewable credits to be counted against the country’s contribution towards the joint 2030 EU renewable energy target.

Joint operation

Disjointed operation of an integrated offshore wind energy grid will never deliver the full value of such a massive undertaking. Siloed operation also fails to provide adequate investment signals for wind farms.

Regional Coordination Centres were introduced in 2019 as the newly created entities for enhanced regional coordination of system operations. The strategy envisions this as the mid-term operating regime and only mentions establishing joint operational control by regional independent system operators as a long‑term possibility.

We should rather use the unique characteristics and challenges of the offshore energy resources as an ideal opportunity to implement the regional independent system operator model now, in anticipation of possible application elsewhere in Europe.

This is not the time for gradualism. Failing to scale up offshore wind with onshore wind and solar on the stated timeline would mean either the need for other, even more challenging undertakings, or the failure to reach agreed EU climate targets altogether.

The strategy sets a clear path but concedes too much to politically driven gradualism. We should instead acknowledge and embrace the leap that will be required to achieve Europe’s ambitions for offshore wind.

We should seize the opportunity to plan, finance and operate the offshore grid as a truly European resource and as a pilot for European power system operation.

We should seize the opportunity to throw a stone into the sea and find out how far the ripples spread.

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