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New Adopters Could Add 3 GW To European Offshore Wind Capacity

Posted: 05/03/2020

Categories: Work at Height

Bloomberg New Energy Finance (BNEF) analyst Imogen Brown, speaking at the 2020 Offshore Wind Journal Conference in London on 4 February, has stated that many European and Nordic countries that plan to increase renewable energy capacity that also have a fast-growing demand for energy, will be turning to offshore wind as the recognition of its part in energy production grows.

Talking to Riviera Maritime Media, she added that countries including Sweden, Portugal, Spain, Croatia, Slovenia, Lithuania, Finland, and Turkey were in a list of countries that could in part help form the solution by 2030. The front runners are Spain, Italy, Greece, and Lithuania.

“The capacity additions we anticipate in 2029-30 do not represent known projects, they are placeholders for future offshore wind developments,” she explained, noting that they could amount to as much as 3 GW of capacity.

The potential 3GW capacity by 2030 contributes 4 per cent to the H2 2019 European offshore wind forecast of 72.8GW in 2019-2030. BNEF expects that the offshore wind capacity will be allocated via auctions, and countries that score high in the rankings have already announced developments in offshore wind.

The BNEF study on the opportunities for offshore wind for such countries matched potential opportunity against demand, and capacity factors of the countries noted, and their ability for project financing.

“High power prices are a good signal for offshore wind,” Ms Brown said. “Peak pricing over the winter period is also a good signal. In some countries, such as Turkey, demand is set to grow rapidly, but the financial risk is higher.”

In a three-year, around-the-clock average, the highest power prices belonged to Italy, Greece, and Portugal. Italy relies on almost 50 per cent of natural gas for energy generation, which has a tendency to have an expensive marginal price, while Greece and Portugal are still mainly reliant on coal, which can have high costs during periods of high demand.

In the ‘Nordpool’ region of the Nordic and Baltic countries, prices are lower due to the large amounts of hydropower, which has a low marginal generation cost, in particular, Finland and Sweden, which contributes to the lowest power prices across Europe.

During the 2016-2018 period, seasonal peaks in Greece, Italy and Portugal followed a similar trend. Cold weather-induced power price spikes in January 2017 and November 2017. Significant hydro capacity – which can smooth demand price peaks – means steadier pricing in the Nordpool countries and a deeper market for long-term hedges.

Estonian developer Saare Wind Energy has been developing a 600MW offshore wind farm since 2015, which is hoped to be built to the southwest of Estonian Island Saaremaa, in partnership with Dutch maritime contractors Van Oord, also according to Riviera Maritime Media.

The next phase in the development process includes an environmental impact assessment which will be initiated after receiving a positive decision from the Estonian authorities. Van Oord said discussions leading to the agreement were supported by the Estonian Investment Agency.

It is expected that the Saaremaa site will be an excellent opportunity for offshore wind, and will form the basis of an international Baltic power grid. Combined, BNEF estimates that the Baltic countries it looked at have 365 GW of technical potential available for constructing offshore wind.

The most promising of these is Lithuania, which it expects will support 700 MW of offshore wind capacity by 2030. Lithuania plans a 700MW offshore wind auction in 2023, targeting commissioning by 2029. Italy has set out a target for 900MW of offshore wind in its 2030 national energy and climate plan (NECP).

In Europe, offshore wind farms generate much more power in the winter months due to higher wind speeds. “Being able to realise peak prices when demand is high puts offshore wind at an advantage to other renewable energy systems,” said Ms Brown.

BNEF also compared onshore wind ‘saturation’ in potential new markets, which it also regards as a ‘good signal,’ with several European countries facing ‘push back’ against further development of wind energy onshore.

Another potential market is those who rely on fossil fuel imports for energy, such as Island economies, with renewable energy and offshore wind being lower cost than current arrangements.

According to BNEF’s scoring matrix, the most promising new market for offshore wind development is Spain, driven by its ambitious decarbonisation plans and large-scale power demand. Italy also features highly in the matrix: its latest energy plan calls for 900MW of offshore wind capacity by 2030.

Greece is also a prime candidate for renewable technology, and the BNEF expects 500MW of offshore wind by 2030.

BNEF estimates 800 MW of the 3 GW will be floating wind, split between Greece and Spain. A steep continental shelf in the Mediterranean and deep waters throughout the Aegean make these markets ideal candidates for floating wind technology.

The EU is adopting a new set of targets for renewable energy and emissions reductions in the 2021-30 period. Member states have submitted draft NECPs which outline their strategy in achieving their decarbonisation targets.

These targets, along with coal phase-out policies will create new opportunities and innovation for renewable energy technologies such as offshore wind, due to a large amount of renewable energy generated at high load factors. This could help countries to bridge the gap between current levels of renewable generation and their 2030 goals.

Smaller countries, such as Lithuania, Estonia, Slovenia, and Finland have targets below 50 per cent, and many are already well on the way to achieving them. Turkey, Albania, and Latvia, non-EU countries, have not submitted NECPs, but Turkey has set out its own targets to 2023.

Turkey is leading the way when it comes to demand growth. The BNEF expects a 40 per cent growth in demand by 2030, driven by population growth and economic activity. Albania also has a strong demand growth, but from a low starting point, its contribution to the 2030 targets will be small. Italy, Spain and Turkey will be the largest consumers of power in 2030.

Despite Brexit, and the UK no longer being an EU member, the UK Department for International Trade is cooperating with German wind energy business network WAB for offshore wind and green hydrogen.

The partners started cooperating on 6 February with a joint WAB regulars’ meeting at the British Embassy in Berlin, with talks about the role of offshore wind on the way to climate neutrality, as reported by ReNews.

Six companies gave presentations, including WAB members Convent Experts, Neova and Steelwind Nordenham and UK companies 3Sun Group, Offshore Design Engineering and LOC Germany.

The UK has the role of an official partner country at the conference, bringing experts to speak about current market developments, the political framework, and innovations in renewables. WAB said the aim is to continue working with DIT regardless of Brexit.

For established offshore wind markets, the timelines for project developments vary from four to 10 years, from initial announcement to commercial operation, all depending on the scope of the project.

For new markets, BNEF assumes a six-year development timeframe from auction to commissioning, where auction winners must gain environmental permits before commencing construction.

If your business operates within the renewables sector, please ensure that your offshore teams and technicians have attended certified GWO courses over the past two years and hold valid certification to prove it.