SP8 WORKSHOP on Future market arrangements for large-scale offshore wind energy development in the European Seas

10th of June, 2021 - webinar

The workshop will be conducted online on June 10, from 10:00 – 12:00 CEST.

Here you find the presentations and the full record of the workshop.

Offshore wind energy in Europe has in the past decade grown by an impressive growth rate, reaching more than 33 GW of installed capacity. Even more effort is needed to reach the targeted 60 GW of offshore wind capacity by 2030 and 300 GW by 2050 (450 GW including Norway and UK) that is laid out in the projections by the European Commission. The investment needs for such large-scale offshore energy deployment amount to an unprecedented level in energy investments of €800 bn until 2050, two thirds of which is associated with grid infrastructure.

This SP8 workshop will explore how future market arrangements for large-scale offshore wind energy could look like to create a transparent, fair and non-discriminatory European offshore energy market. We will explore different market organisational, economic, financial, and governance aspects for offshore wind energy and its related infrastructure, including hubs, artificial energy islands, offshore electricity grids and interconnectors, power-to-x facilities and potential exploitation of existing oil and gas infrastructure.

Speakers and presentations confirmed:

>> Iratxe Gonzalez-Aparicio, TNO

Developing a long-lasting offshore wind business case in the Dutch Energy Transition by 2050

Gonzalez-Aparicio, S. Krishna-Swamy, N. Chrysochoidis-Antsos, J. Stralen, B. Bulder

The European offshore wind energy ambition is to become a key source by 2030 and to meet more than 50% of power demand by 2050. This requires to increase the capacity from current 22 GW to 450 GW in the North Sea. However, the very high share of electricity production from offshore wind is increasing the stochastic nature of the power system and creating large uncertainties for the wind business investments and decision making. This study provides insights for a long-lasting offshore wind business case under the Dutch decarbonized pathways (NECP and TRANSFORM scenarios), understanding its potential and suggesting the optimal realization of such a market by converting part of the electricity into green hydrogen as an interesting prospect. The main results of future Dutch power system modelling show that future electricity price fluctuations are most sensitive to large-scale wind and solar energy integration, demand for electricity and flexibility and EU-ETS-CO2 prices. Such combination increases future electricity prices with higher volatility and risk exposure. Beyond 2030 the dependency between prices and such market drivers is even stronger to achieve climate neutral system.

>> Juan Gea-Bermúdez, Technical University of Denmark

Hydrogen generation towards 2050 in the North Sea region. Should it take place offshore or onshore?

Gea-Bermúdez, J., Kitzing, L., Ramos Galán, A., Koivisto, M., Bramstoft, R.

Hydrogen can be a key component of future energy systems. This talk presents an analysis performed with energy system optimization about hydrogen generation towards 2050 in the North Sea region. The results show that onshore hydrogen generation is generally preferred over offshore, and if offshore hydrogen generation is forced, then the costs of the energy system are likely to be higher.

>> Philipp Beiter (US National Renewable Energy Laboratory)

Toward global comparability in renewable energy procurement

Philipp B, Kitzing, L, Spitsen, P, Noonan, M, Berkhout, V, Kikuchi, Y

Prices from the competitive procurement of renewables are increasingly used for the comparative evaluation of financial and technology performance. We introduce a method that allows for like-for-like comparisons of procurement prices across jurisdictions, over time and to established cost metrics. In an application to global offshore wind projects, we find that revenue varies greatly, both in absolute terms and composition. Our findings emphasize the continued importance of support regimes, even when direct subsidy payments decline.

>> Malte Jansen (Imperial College London)

Global competitive procurement of offshore wind: Policy choices and outcomes

Jansen, M, Beiter, P,  Riepin, I, Müsgens, F,  Juarez Guajardo-Fajardo, V, Staffell, I, Bulder, B Kitzing, L

Offshore wind energy is experiencing a riveting global development. We provide a detailed quantified overview over competitive procurement schemes, including geographical spread, volumes, results and design specifications. Our comprehensive global dataset reveals that offshore wind competitive procurements are designed heterogeneously. Although most remuneration schemes provide some revenue stabilisation, it materialises in several different forms, including feed-in tariffs, one-sided and two-sided versions of contract-for-difference, mandated power purchase agreements, mandated renewable energy certificates. We describe the schemes in 8 different jurisdictions in detail and evaluate the bids in their national context. We comment on bids, for example, whether they are believed to be cost‑competitive, how likely construction will occur, whether strategic bidding may have been involved and other national aspects that might have influenced the results. We find that offshore wind farms are exposed to market price risks to different extents, though less mature markets have less risk associated with them. No specific design can be singled out to lead to the best performance, emphasises that in procurements, competition is the crucial factor for success.

Agenda:

10:00-10:10: Intro by the chair Lena Kitzing
10:10-10:30: Iratxe Gonzalez-Aparicio, TNO
10:30-10:50: Juan Gea-Bermúdez, Technical University of Denmark
10:50-11:00: Short break (buffer)
11:00-11:20: Philipp Beiter (US National Renewable Energy Laboratory)
11:20-11:40 Malte Jansen (Imperial College London)
11:40-12:00: Joint discussion and Q&A

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CALL FOR PRESENTATIONS – CLOSED

We call for contributions for presentations about work based on economic, financial and policy analysis, including on topics related to market setups and ownership structures, bidding zones, economics of hybrid projects, future role of national TSOs, financing and business models, public private partnerships, merchant investments, support scheme design, incentivisation for sector coupling, spatial planning and international collaboration aspects.

If you want to contribute, please contact Flaminia <f.riccionicapelli@eera-set.eu> and/or Lena Kitzing <lkit@dtu.dk>.
Deadline: Please send your proposal before May 23, 2021.

Registration is free, but mandatory.Please do it here.