ENTSO-E’s views on offshore development

Offshore wind energy will bring a key contribution to reaching the objectives of the EU Green Deal. The EC’s offshore RES strategy anticipates the integration of 300 GW offshore wind generation capacity into the energy system by 2050. The magnitude of this transition will raise new challenges for the European electricity system: accomplishing the necessary connections and grid development at least cost; keeping the system secure; accommodating a complete redefinition of power flow patterns; considering key constraints linked to spatial planning, environmental protection, and public acceptance; achieving an integrated perspective over time, space and sectors; ensuring flexible resources to keep the power system balanced.

In a series of papers ENTSO-E assessed possible solutions to contribute to the realization of the EC’s Offshore strategy. The following paragraphs summarize the key messages relating to the Offshore Strategy in the fields of system development, system operation, market design in which TSOs have an essential and active role in enabling the achievement of the EU offshore goals.

A key finding is that existing roles and regulatory frameworks are largely fit for purpose also for networks being extended to marine environments. Existing, well-functioning solutions applied onshore can be used offshore as well; this is valid for system development, market design and system operations. Robust and well-established solutions can span both land and sea and will contribute to the success and fast delivery of the European offshore renewable strategy. Further quantitative analysis is also recommended to assess the final impact of the offshore development and the regulatory options considered on welfare, CO2 savings, market functioning, and on the way interconnected systems will be operated to maintain their security.

System development – holistic planning of a more complex but integrated system

 Currently, offshore grid developments consist mainly of single-purpose solutions, such as radial connections of offshore windfarms (OWFs) and submarine interconnections connecting two bidding zones. In the future, these single-purpose solutions will continue to be chosen in many cases, but additionally there will be an increasing number of dual-purpose solutions that connect both markets and wind to shore (‘offshore hybrids’). Multi-purpose solutions, which additionally could cross energy sectors and include offshore consumption (e.g. electrolyzers), will emerge as well.

To cope with these developments, ENTSO-E and the TSOs will expand their planning support tool – the Ten-Year Network Development Plan (TYNDP) – to integrate offshore and onshore developments, ensuring holistic planning across time, space and sectors (a one-system approach) to bring offshore renewable energy to end-users.

TSOs are responsible for selecting the most appropriate connection point to shore, considering potential onshore congestions, expected future generators’ connections, and necessary network development or reinforcements.

TSOs are strongly committed to ensure the future offshore grid is developed and operated with full respect for the maritime environment and other activities taking place in the maritime space.

Single purpose

Single purpose

Dual / multi purpose

Multi purpose

Ensuring interoperability requires mutual development effort

Multi-terminal and multi-vendor interoperability will be essential for ensuring successful development of the HVDC offshore systems, contributing to increased cost efficiency and reliability of the future grid.

Technical interoperability and standardisation needs to consider future technological developments. TSOs will continue to contribute to the R&D efforts aiming at development of practical technical and legal solutions in collaboration with technology providers, relevant stakeholders and policy makers.

To support the development of the interoperability requirements, a real full-scale demonstration project is deemed necessary to reach higher level of technology readiness and facilitate the standardization of systems and equipment in a “plug and play” way.

Market design – European markets across land and sea

While single-purpose solutions are well-established in the existing market framework, the deployment of dual and multi-purpose solutions needs to consider how offshore wind power should be treated marketwise. After consideration of the pros and cons of the two main market design concepts and subject to further quantitative analysis, the use of Offshore Bidding Zones (OBZ) appears to be a promising solution.

Indeed, it ensures market and system operation efficiency through competition, reflects physical limitations of the grid, gives correct price signals to other purposes including on site hydrogen production and is compatible with existing requirements for capacity allocation as well as with Flow-Based market coupling principles (Advanced Hybrid Coupling).

The OBZ market design could, however, have an impact on market revenues for Offshore Wind Farms connected to a hybrid asset, in comparison with the home market model. While the actual effect on final positions would significantly vary from one project to the next, a revenue stabilization mechanism for the wind farm operators might be needed.

The choice of an appropriate mechanism in that respect and especially the source of financing needs to be assessed against possible effects on market functioning and competition, the impact on onshore grid users, and compatibility with key principles underlying tariff setting rules in the EU. Solutions with respect to RES remuneration should be compatible with the principles of onshore market and grid operation.

System operations – regional cooperation to ensure efficient integration across land and sea

ENTSO-E trusts that addressing system operation challenges arising from large scale offshore energy integration can be tackled by building on existing solutions, especially by utilizing all possible means to keep the system balanced and through enhancing TSOs’ direct coordination, with Regional Coordinating Centers (RCCs), and including non-EU neighbors.

The current regulatory setup is suitable to cope with the expected stepwise development of offshore grid infrastructure. Existing roles of TSOs and RCCs can be applied offshore, ensuring efficient offshore RES integration, safe system operations and sharing of reserves across the entire European energy system. Moreover, and given the scale of the expected transition, stability in the regulatory design for system operation is essential to ensure reliable and secure operation, which TSOs provide in the interest of society. The focus should be on full implementation of the existing legislation and improving existing solutions, aimed particularly at increasing the efficiency of market and system operations.

The challenges ahead are huge and not all answers are known today as technology will evolve. However, parallel development of flexibility and innovative solutions, for example large-scale storage, is a precondition for the successful offshore renewable energy integration.

TSOs are ready to continue taking strong responsibility for the efficient and coordinated development and operation of the grid infrastructure, both onshore and offshore and engage with all actors for the successful realization of the Internal Energy Market (IEM) and the achievement of climate neutrality targets.

Downloads

ENTSO-E’s Position on Offshore Development:

Summary of Recommendations
Summary of Recommendations
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Basic pillars of Offshore Development
Offshore Development
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Market and Regulatory Issues
Offshore Development: Market
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Interoperability
Offshore Development: Interoperability
Download (PDF, 1.7 Mb)
System Operation & Governance
System Operation
Download (PDF, 1.3 Mb)