Report prepared by Isabel Azevedo, Jean-Michel Glachant, Leonardo Meeus and Marcelo Saguan, under the scientific direction of François Lévêque.
Grids are already developing offshore, and this development will continue even though at what pace and how they will develop is still uncertain. Indeed, there are different possible configurations for a future offshore grid: it can be a simple multiplication of standalone lines that provide each a single service (either connection of generation, or connection between transmission grids); or it can be a more integrated infrastructure like an offshore meshed grid that combines and interconnects dozens of offshore lines and generation units (hereafter combined solution).
A combined solution can usually bring some advantages compared to the multiplication of individual lines. Indeed, it typically requires fewer physical components, but has higher power capacity, which is commonly beneficial due to the economies of scale present in transmission systems. This has also been the case onshore with the development of the transmission grid, where a combined solution approach has been favored for a long time now, especially since the introduction of both technology and operational standards in the previous century.
However, the development of a combined solution offshore is still unpredictable due to the existing uncertainties regarding necessary technological developments. In fact, most developments offshore use a less-known technological system for which standards do not yet exist, i.e. it is based on Direct Current (DC) instead of Alternating Current (AC) systems; and an integrated solution offshore would require some technology components that are still not available today. Moreover, there are also strong costs uncertainties, not only due to the referenced uncertainties in technology development, but also due to the unclear role of a future offshore grid. Indeed, there are different visions on the possible role of an offshore grid in the future; while some envisioned a regional grid whose main role is to integrate offshore wind from Northern Europe, others envisioned an infrastructure which is integrated into a more global grid (covering EU and neighboring countries).
In a recent Think report to the European Commission (DG Energy), we based our recommendations in distinguishing these two different types of offshore grid developments.
From our analysis of common regulatory practices as well as specific case-studies of regulatory procedures in different member states, it is clear that the frames that are applied to the investment in standalone lines are not economically sound: they are not aligned with the common guiding principles of an economically sound frame (i.e. planning, competition, and beneficiaries pay). Nonetheless, there are already some pioneering member states (e.g. the UK) that are beginning to follow a better economic approach.
In the case of standalone lines, there is no need for a specific EU intervention because the possible negative economic effects are mainly local, and for the issues that do require an EU intervention, we consider that the same intervention should be applied to standalone lines as to onshore transmission investments. Still, it is important to continue the policy actions that are ongoing for grids, onshore as well as offshore.
At the EU level, there are important policy actions in place: the implementation of the third package is indeed ongoing, and an infrastructure package has recently been proposed by the European Commission. At national level, it is also important to continue the experimentation with novel regulatory frames (e.g. Germany, UK and Sweden) that have been fine-tuned for the connection of offshore wind farms. Note that the EU could add value by supporting this learning process, for instance, by benchmarking existing practices.
Our analysis of ongoing combined solution projects (e.g. Kriegers Flak, COBRA cable and Murray Firth HVDC Hub) illustrates that the difficulties faced by these projects under the current regulatory frames are tremendous. Therefore, the offshore grid development is currently distorted towards a multiplication of standalone lines, even if there might already be an economic case for combined solutions in some projects.