How to build a North Seas Grid without regretting it

How to build a North Seas Grid without regretting it

The North Seas contain vast and largely untapped renewable energy resources. Whether or not these resources are ultimately exploited remains a matter of great uncertainty. However, important decisions on grid development in the North Seas will need to be taken before the amount of offshore wind and other renewable generation is fully known.

If the necessary grid infrastructure is not built on time or in the right place, then the option of utilising high levels of offshore wind in Europe in coming decades will effectively be frozen out. But regulators and investors are rightly concerned about overinvesting in cables and wires that could end up under-used if the expected volumes of offshore wind do not materialise.

To address this vicious circle, E3G and Imperial College London have explored the risks and opportunities associated with designing the North Seas electricity grid using leading-edge computer modelling. This analysis has demonstrated the significant advantages of taking a more strategic and co-ordinated approach to network planning in the North Seas region.

In particular, new approaches to network design can ensure that the costs associated with creating the option for significant levels of renewables deployment will be far less than the costs of reducing short term investment costs and restricting future options.

The modelling suggests:

  • Judicious use of anticipatory investments can keep offshore wind options open at relatively low cost – with the ‘worst case’ economic regret restricted to around €1 billion even if significant volumes of offshore wind fail to materialise.
  • Moving to a regional, strategic approach to grid planning with full resource sharing could save €25 – €75 billion in the period to 2040, compared to the current incremental member-state approach. A proactive approach that plans offshore wind locations at the same time as grid design could increase these benefits to €30 – 80 billion.
  • Even the most basic approach to strategic grid design, involving the clustering of offshore wind parks into offshore hubs, would still save €8 – €40 billion to 2040, depending on levels of offshore wind deployment.

This is an opportunity that demands the attention of Energy Ministries of the North Seas countries, as major cost savings can be secured with relatively little regret. However, the existing fragmented landscape of national policies and regulatory approaches is not well suited to capturing the full scale of these potential benefits.

The analysis concludes that North Seas countries should, therefore, establish a joint ministerial level body charged with defining political direction, targets and objectives for the exploitation of energy resources in the North Seas. It is also important to establish a new institution with strategic network design oversight. This body would need to establish the future scenarios that will enable TSOs to plan grid development in the North Seas during the 2020s and be charged with giving particular attention to minimising the cost associated with retaining the option of high levels of offshore wind deployment.

The full policy report is attached along with the accompanying technical report.

 This report is now available in German here.

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