• Offshore Wind Power
  • DER
  • Hydrogen
  • EU Energy Policy

North Sea Wind Power Takes Shape

Izabela Kielichowska
Apr 27, 2021

Guidehouse Insights

Development of a low carbon society in Europe requires swift and massive changes in the energy system. The EU Strategy to Harness the Potential of Offshore Renewable Energy for a Climate Neutral Future puts offshore wind at the heart of this process. The deployment of offshore energy must be further supported by the coordinated development of offshore energy grids and sectoral integration into the European energy system.

Key Market Players and Governments Commit to Energy Islands by the Early 2030s

The North Sea Wind Power Hub (NSWPH) consortium consists of TenneT, Energinet, and Gasunie. It aims to support the development of the world’s first offshore energy hub, integrating offshore wind connections, and interconnections between interested countries’ green hydrogen.

Policymakers support this process. The Danish government is committed to making energy islands operational in the early 2030s and is actively cooperating with many partners, including the Dutch government via a memorandum of understanding (MOU). This MOU is operationalized by the transmission system operators creating the NSWPH consortium, which provides factual evidence to support the international discussion about and progress of offshore developments.

With that in mind, the NSWPH consortium has developed and published the Topical Agenda discussion paper. The document serves as a structured discussion that identifies and explores key policies as well as existing regulatory and market issues that must be tackled to support the large-scale deployment of offshore energy.

Guidehouse has actively supported NSWPH developments since 2017. Guidehouse was also awarded the opportunity to provide assistance in structured discussions with policymakers to realize the NSWPH. Joint development of the Topical Agenda and the resulting discussion papers are the core elements of this engagement.

The Topical Agenda identifies key policy topics that must be addressed to ultimately arrive at a full enabling framework to provide necessary investment certainty for project stakeholders. These topics are:

  • Main principles: Frameworks defining the outline of the regulatory environments, such as offshore wind targets, and general market setup of cost-benefit analysis.
  • Scope of the first project: Location, technology choices, size, etc.
  • Cost and benefit: An agreed framework for assessing cost-benefit analysis (CBA) and cost-sharing (cross-border cost allocation [CBCA]) among involved countries.
  • Investment framework: Including the necessary support schemes, financing, cost recovery, and the energy market outlook.
  • Legal framework: Enforcing the conclusions from the previous topics through contractual arrangements between the project stakeholders.
Guidehouse and the NSWPH Program Outline Topical Agenda Implementation

Many of the topics such as CBA/CBCA, power-to-X, and market design are interdependent. The following figure, created by Guidehouse for the NSWPH Program, illustrates these topics and their respective stakeholder levels.

Detailed Overview of the Topical Agenda

Detailed Overview of the Topical Agenda

(Source: Guidehouse)

Addressing the Topical Agenda topics in a timely manner and in coordination with the right stakeholders is fundamental for creating an environment that promotes offshore wind development and the ability to facilitate imports of offshore energy to load centers onshore. Stakeholders include national governments and the European Commission, as well as also other TSOs, ENSTOE, ENSTOG, offshore wind sector players, and investors in green hydrogen. With Guidehouse's support, the NSWPH consortium is sharing its expertise in the field. It supports the Danish-Dutch MOU and continually develops evidence-based discussion papers, tackling topics to support the development of offshore hybrid infrastructure.

The Topical Agenda discussion paper identifies and structures key topics while putting them on a time scale, serving to progress with the MOU and further European offshore wind developments in the Northern Seas. The paper expects to meet the ambitious targets of making the first offshore hubs operational in the early 2030s.