The UK has a world leading ambition to develop 50 GW of offshore wind in its waters by 2030. This ambition is truly amazing and will undoubtedly help to further catalyse not only the UK’s energy transition but will place it as one of the global leaders in decarbonizing its economy. But, and there is a big ‘but’, this ambition will not be met if greater attention isn’t paid to the offshore and onshore electrical grid infrastructure that needs to be built to enable the connection of all that offshore wind.
To connect the huge increase in offshore wind capacity that will be delivered in the years to 2030 and beyond, electricity grid infrastructure will have to be delivered at a scale and pace never seen before. It will require new technologies, business models, regulatory structures, and significantly greater levels of co-ordination between a much wider constituent of offshore stakeholders. Great work is being done in some areas but more needs to be done across the board to ensure offshore wind is connected when it needs to be and in a way that best serves developers, the markets they connect to and the consumers that will, ultimately, bear the cost.
The UK was an early pioneer in offshore wind development and its connection, providing a range of policies that encouraged the deployment of offshore wind at scale. Within the suite of policies, the Offshore Transmission Owner (OFTO) regime provided an effective way for offshore transmission connections to be delivered, financed, and operated at a relatively efficient cost to consumers. However, there is now consensus that more radial, point-to-point connections will not deliver the scale of forthcoming new capacity quickly enough, nor efficiently. To meet the ambition, greater co-ordination and direction is required.
Increased co-ordination between European countries has seen initiatives to develop more integrated networks accelerating. For example, The European Union’s PROMOTioN project (that DNV was proud to Chair) highlighted areas where greater co-operation, standardization and technological advances in certain areas could facilitate a North Sea integrated transmission system whilst delivering considerable economic benefits to industry and consumers. Many of that project’s participant countries have already incorporated the key recommendations into offshore wind and transmission regimes to start driving greater co-ordination. However, the UK is only now accelerating many of the regulatory and policy changes that are needed to plan and deliver the required grid investment at the pace needed.
In recent years, there has been a raft of initiatives and policy reviews in this area. Primarily driven by the Government’s Offshore Transmission Network Review (OTNR), we have activities covering (but not limited to!): future Interconnector policy; co-ordinated offshore connections; pathfinder proposals; possible enduring regimes; Holistic Network Design (HND); draft National Policy Statements to support energy transformation; future incentives and remuneration; the list goes on. These are all valid and important areas of work, which do need addressing but my concern is that we are not far from the 2030 deadline and the likelihood of all these workstreams delivering results which can be turned in to actions and subsequently assets in the water is becoming a tall order. Even greater focus should be placed on the quick win/no-regret policy and regulatory decisions that will kick-start the development of more centrally planned, integrated offshore grids.
Perhaps more controversially, to deliver truly more efficient offshore electrical infrastructure, there also needs to be a far more integrated approach between offshore wind and the incumbent oil and gas industry. These two stakeholders haven’t, traditionally, been easy bedfellows but more joined-up thinking could result in huge opportunities to 1) connect offshore wind more efficiently and quickly whilst 2) laying the foundations for the significant decarbonization of oil and gas production through the increased electrification of offshore operations.
To date, almost all the policy and regulatory discussions have been siloed, treating offshore wind and the oil and gas industries separately. The two sectors have now picked up the baton to drive co-ordination with the hope of delivering a wide range of connection solutions. These range from large, centralized offshore ‘electrical hubs’ connected to shore which can be used by offshore wind alongside oil and gas platforms to the direct connection of offshore wind to oil and gas facilities.
This co-ordination between the two sectors could, undoubtedly, drive new connection models which is positive but the very wide range of technical solutions being progressed risks fragmentation and a divergence from the co-ordination that has been the key theme to this blog. If we are to achieve the country’s offshore ambitions, the offshore electrical system must provide assets and systems of a sufficient scale alongside as simple a regulatory framework as possible to allow new and innovative financing and operational structures, whilst minimizing the likelihood of stranded assets in the future. It will also drive the establishment of a truly integrated offshore energy system by connecting existing and future energy vectors with the widest possible range of markets whilst supporting decarbonization and security of supply.
A further area which requires far greater attention than is currently given is the lack of focus on technical standardization and the interoperability of transmission systems and components. Put simply, if a set of policies and regulations can be developed that facilitate new connection methods and an integrated electrical system, will we have the technical compatibility required to actually build and operate it? This area of co-ordination is, perhaps, one of the most difficult to achieve. OEMs, developers, and operators are rightly protective of their IP, relationships, and innovation. However, if we are to achieve the goal of a truly integrated offshore energy system, the level of co-ordination between different manufacturers’ kit, control systems and operations must be much greater. It may be possible to legislate to improve interoperability, but it is far more powerful if industry and the OEMs themselves can start to drive greater co-ordination. The possible size of the prize at the end is irrefutably greater if this can happen more quickly than a legislated approach would deliver.
The establishment of integrated and co-ordinated offshore electrical grids and connections is key to the achievement of the UK’s ambitions for its offshore energy sectors. Innovations in approach, financing and technical solutions should be accelerated whilst ensuring the overall system is as co-ordinated as possible to reduce the risk of asset stranding and inefficiencies. This is not an easy balance to strike but solutions must be found if we are to deliver on the world-leading ambitions that form the heart of the UK’s energy policy.
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Michael is DNV Energy System’s Business Director for Power Grids in UK & Ireland. He is a regulatory and strategy professional with over 20 years’ experience in different roles within multiple regulated utility industries.
Michael’s primary focus is on the commercial and strategic impacts of regulation, policy and market structures within the UK and European energy markets and networks. As Business Director for Power Grids in UK & Ireland, he is responsible for the strategic direction and growth of DNV’s activities across the sector.
Michael brings extensive experience in advising on the commercial impacts of regulatory and market changes from the operational to strategic levels. He has significant knowledge of industry governance structures, representing industry sectors on strategic industry groups, code governance panels and has advised several Governments on key reform programmes. Michael brings a networks and generation markets focus, with deep operational understanding of interactions between the networks, markets and Government support mechanisms for both renewable and conventional generation.