Iceland and the European offshore electricity grid Justin Wilkes Policy Director The European Wind Energy Association.

Iceland and the European offshore electricity gridJustin WilkesPolicy DirectorThe European Wind Energy Association

More than 700 members from almost 60 countries

• Manufacturers with a leading share of the global wind power market

• Component suppliers• Research institutes• National wind and renewable associations• Developers• Electricity providers• Finance and insurance companies• Consultants• Contractors

This combined strength makes EWEA the world’s

largest and powerful wind energy networkwww.ewea.org/membership

EWEA Lead Sponsors

Tackling the flexibility challenge

Variability is an inherent characteristic of every power system

Flexible generation is largely provided by gas, hydro and to a lesser extent biomass

Large scaleDSM and newenergy storage remain unavailable in the short term

An economically viable power system with large amounts of RES will require changes in all 3 areas Source: IEA 2011, Harnessing

Variable Renewables

Momentum for grid development in Europe is evident

• Already in September 2009 EWEA published its “Offshore Network Development Master Plan”

• North Seas Countries Offshore Grid Initiative signed by 10 countries in 2010 – ongoing work

• Offshore Grid is a key part of the European Infrastructure Package

• Second ENTSO-E 10-year network development plan in the making

Prominent grid infrastructure projects:

• UK/Norway under consideration • NorGer - Germany/Norway ministerial agreement• Krieger’s Flak (Germany – Sweden and Denmark on

hold) with EERP financing• Cobra cable (Netherlands/Denmark) with EERP

financing • East-West interconnector, EIB loan (Ireland/Wales)• BritNed, EIB loan (UK/Netherlands)• Skagerrak 4 (Denmark/Norway)

Global cumulative wind power capacity 1990-2007 (MW)

EWEA’s 20 year offshore network development plan

• All necessary grid updates to transport all electricity produced by planned, proposed, under construction and operating offshore wind farms to European electricity consumers in an economically sound way

• Recommends building a transnational offshore grid infrastructure to connect:

40 GW by 2020

150 GW by 2030

Global cumulative wind power capacity 1990-2007 (MW)

EWEA’s 20 year offshore network development plan

• Based on:- Existing TSO plans- TradeWind scenarios

• Added value of plan:

- Provides step by step timetable for grid development

- Suggested capacities- Integrated with development/concession

zones

•Lines/branches: submerged HVDC cables characterised by transmission capacity, •Offshore nodes: offshore platforms containing HVDC conversion equipment, switchgear etc. to serve as:–common connection points for a number of offshore wind farms; –common connection points for a number of other marine generators; and –intersection (junctions) of network branches. •Onshore nodes: connection points to interconnect the offshore transmission grid to the onshore transmission grid.

Offshore grid design

Global cumulative wind power capacity 1990-2007 (MW)

EWEA’s 20 year offshore network development plan

Source: EWEA 2009

EWEA concept one of many

Global cumulative wind power capacity 1990-2007 (MW)

Building the European offshore grid

• Predictable energy output

• Connections to more than one country

• Power trading between countries

• Viable alternative to onshore grid construction

• Connection to other marine renewable energy sources

• More economical utilisation of grid through shared use

• More energy security

• More interconnection capacity means more firm power

• Build a single European electricity market to benefit all consumers

BUT: Iceland not yet part of these considerations

Benefits

Current EU approach to facilitate grid developmentsCurrent TEN-E programme is insufficient - COM investment estimates 2010-2020:• Electricity: 140 bn € (onshore, offshore and

smart grids at transmission and distribution level)

• Gas: 70 bn €

TEN-E budget 2007-2013 was increased from 155 mln € to currently 5.1bn € 2014-2020 in the „Connecting Europe Facility“ and revised guidelines on TEN-E

Agreement on Trans-European Networks

Main elements: • Priority infrastructure corridors agreed – all renewables

focussed– Northern Seas offshore grid– North-South electricity interconnections in Western Europe– North-South electricity interconnections in Central Eastern

and South Eastern Europe– Baltic Energy Market Interconnection Plan in electricity

• Priority thematic areas agreed– electricity highways– smart grids– national/regional TSO coordination (along the lines of

CORESO, CECRE)• PICs and PTAs have:

– Permitting and planning deadlines of 3 ½ years (binding...)– Access to CEF/TEN-E funding

A European Offshore/Supergrid

What is needed from the European stakeholders (+TSOs and Regulators):

• A European approach towards an optimised European electricity system should be promoted.

• Acknowledge that a European Offshore/Supergrid will be beneficial rather than costly for consumers.

• Design and implement schemes that favour investment decisions, and ensure a cost recovery for the investors, especially on cross-border projects, which require a more coordinated approach.

• Coordination is critical for tackling the challenges of potential distortions created by different interconnection regimes.

Recommendations for Iceland

• Explore bilateral cooperation possibilities in energy policy in general– Particularly with the UK (in progress)

• Make best use of regional cooperation fora – North Seas Countries Offshore Grid Initiative– ENTSO-E regional group for North Sea grid

development

• Use EU legislation– Renewable Energy Directive 2009/28 cooperation

mechanisms

Recommendations for Iceland

• Explore business case for electricity exports to UK

• Explore feasibility of HVDC interconnectors – Address technology challenge– Address financial risk

Ongoing challange: How to create a facilitating environment for private and public investments in energy infrastructure in the EU • Issue for TSOs/private investors: Most interconnectors

might have good business case, but access to equity is difficult

• Private investors often lack awareness on why investments in energy infrastructure are viable (low ROR, but also low risk, especially interesting for institutional investors)

• Environment slowly changing: e.g. Mitsubishi engagement in Tennet to jointly invest in four offshore grid connections in Germany

Need to create a better investment framework for infrastructure Investments: recognised in the European Infrastructure Package

TEN-E budget should be used to leverage private finance, be that EC Project bonds or equity, rather than grants

EWEA’s next 20 Year Offshore Network Development Plan?

Thank you

www.ewea.org

EWEA80 RUE D’ARLONB-1040 BRUSSELS

T: +32 2 213 1811F: +32 2 213 1890E: [email protected]