Transmission coordination road to UK’s 2030 offshore wind ambition

The increase of UK’s goal to have 40 GW instead of 30 GW of offshore wind by 2030 represents a huge opportunity for the sector. However, it is not without its challenges. With the quadrupling of capacity, cumulative environmental and social impacts of the lack of offshore transmission coordination represent a major barrier to delivery, according to the UK Department for Business, Energy & Industrial Strategy (BEIS).

Analysis indicates that achieving 40 GW of offshore wind by 2030 will require up to £48 billion of capital investment. This is double the amount invested in UK’s offshore wind in the 2010s and equates to more than one turbine being installed each weekday throughout the whole 2020s, Chris Fox, Head of Europe and Offshore at BEIS, said at this year’s Offshore Energy Exhibition and Conference (OEEC).

Great Britain’s current offshore transmission regime puts developers in charge of building their own connections to the onshore grid, which is then allocated to an offshore transmission owner (OFTO) through a competitive process run by Ofgem – an approach designed when offshore wind was a nascent sector and with an aim of minimizing risk to developers.

Although this approach has been very successful by contributing to record-low prices in UK’s third Contracts for Difference (CfD) auction last year and saving consumers an estimated £700 million through competition, it has led to each wind farm building its own onshore connection and represents the UK’s domestic coordination challenge.

Fox stated in his energy talk, named The UK and the Offshore Energy in the North Sea, that there is, however, also a need for international coordination as other North Sea countries build out their own resources and continue to invest in cross-border interconnection that allows the sharing of collective resources and improving the security of supply.

To address these challenges, this July, the UK announced an offshore transmission network review, which will bring together the key stakeholders involved in the timing, siting, design and delivery of offshore wind to consider all aspects of the existing regime and how this influences the design and delivery of offshore transmission infrastructure.

“We recognize that offshore wind is an important sector for other countries and are proactively looking to continue to work with and learn from our neighbors around the North Sea and elsewhere in Europe,” said Fox.

“What is clear from some of the initial outputs that national grid electricity system operator TSO here in Great Britain has delivered as part of the review is that there are significant financial and environmental benefits to be achieved through coordination.”

The analysis suggests that by 2050 coordinating UK’s offshore transmission in a way previously not done could deliver up to £6 billion in consumer savings through reduced infrastructure spending and reduce the associated onshore landing points by around 50%, making a massive difference on the environmental and social impacts of delivering such large volumes of offshore wind.

Fox also emphasized that the main challenge is making sure that there are compatible frameworks that support the development of the coordinated cross-border infrastructure so that private sector developers have the appropriate regulatory routes through which they can progress their projects.

The review is said to represent the right place for the UK to start considering the international dimension of the coordination program. According to Fox, the plan is to consider the role of multipurpose hybrid interconnectors in meeting net-zero and how the enduring offshore transmission regime in Great Britain can support the delivery of such projects.

To do this, there is a dedicated workstream to consider how best to realize the benefits of multipurpose interconnection projects which will complement and feed into the work of the broader review, identifying the legal, regulatory and commercial solutions and implementing them as part of the enduring regime.

“Excitingly, there are also a number of potential projects being explored between TSOs in Great Britain and its North Sea neighbors to be able to facilitate their development and ensure these and future projects can be delivered and then can deliver the potential benefits. We will be engaging with interested stakeholders in both Great Britain and the EU through the offshore transmission network review,” Fox added.

When it comes to North Sea coordination, Fox stated that this must be done together. He claims that the UK cannot realize the potential of the North Sea without the EU and the EU cannot do it without the UK.

“It is worth pointing out that in the meantime we are conscious that time is against us and both the UK and the EU cannot realize the potential of the North Sea alone. We are keen to review the EU strategy on offshore renewable energy when published and to collaborate with other European partners, in particular on multi-purpose hybrid interconnector projects.”

Once the review is predominantly focusing on domestic and international coordination of offshore transmission infrastructure, coordination across industries should be taken into account.

BEIS Head of Europe and Offshore said that this refers to the potential to decarbonize the oil & gas sector through the electrification of platforms and the production of green hydrogen using offshore renewable sources, as well as the use of carbon capture and storage. All these will require joined marine spatial planning, cross-borders, compatible regulatory frameworks and continued collaboration to share expertise.

In his OEEC 2020 energy talk, named The Global Offshore Wind Market – Recent trends and expectations, John Dugstad, Director for Wind and Solar at Norwegian Energy Partners (NORWEP), agrees that global oil & gas majors entering the offshore wind industry increases the global reach of the sector.

Dugstad claims that analysis shows a lot of global oil & gas players making alliances with local partners and specific local markets, like in Japan and Taiwan, and we will probably see such steps in South America, as well.

“The global oil & gas majors entering the market will probably lend more to the globalization of the industry. We see that some of the global suppliers will soon be moving into other markets, and are with developers making alliances with local partners to create entities which can work both globally and locally. I think that is a trend of the industry,” said Dugstad.

This year’s OEEC got to hear the current offshore wind portfolio as NORWEP also presented the annual market report.

At the moment, the world has roughly 33 GW of operational offshore wind capacity. Almost double of that, 61,7 GW of projects is secured in terms of a financial investment decision (FID) or some sort of legislation, license or support system already given, as well as some of that being in construction.

The Norwegian nonprofit organization stated that approximately 212 GW has been announced, of which some might be far in the future and some might not happen at all, but it still indicates an immense growth in the industry throughout the next decades.

Dugstad stated that Europe and the EU are still the hub of the industry and the central piece, in addition to China being the largest country in terms of projects. Luckily, there are many markets emerging, such as Sweden, which has not really produced legislation for offshore wind yet but has a number of projects announced, Australia, Vietnam, Poland and India.

This sums up that offshore wind is growing fast to become a global industry. With a base in the offshore energy industries of Europe, it is now growing in size and both eastwards to the APAC market and westwards to the Americas. A growth of 15 GW, or 29%, per year to a total of 76 GW over the five-year period to reach circa 110 GW in 2025 is expected. In the projections, €255 billion will be spent, creating a sound market for offshore suppliers.