During the current sanitarian crisis, the energy transition has everything but lost momentum. Policy makers are united in proclaiming that recovery plans should focus on green investment. Although it remains to be seen how much real additional money will become available, at the very least the goals that have been set will not lose ambition and the energy transition will not be one of the many victims of the coronavirus.

Offshore wind energy in European Green Deal

In one of our previous blogs we discussed the European Green Deal which set the ambition of net zero emission of greenhouse gasses by 2050. Although many of the measures to achieve this were (and are) still to be worked out, the Green Deal mentioned one technology in particular as essential for future electricity generation: offshore wind energy. It is because of this that the European Commission is now developing an offshore strategy. Although the European Commission is currently holding consultation rounds and the strategy is not final yet, we start to get a glimpse of what the offshore future might look like.

Offshore strategy of the European Commission

The European Commission estimates that between 240 and 450 GW of installed offshore wind power capacity is needed by 2050 to keep temperature increased below 1.5°C. According to the Commission electricity will represent at least 50% of the total energy mix in 2050, and 30% of electricity will be generated by offshore wind. It is clear that the EU is committed to use the potential of offshore wind.

The offshore strategy will also include other technologies such as wave and tidal energy, although it is clear that wind has the most potential. An advantage that offshore technologies have in common is that they do not take up costly land space and do not cause resistance from nearby communities afraid of nuisance from nearby renewable energy projects (mostly onshore wind farms). Although this differs per country and the sea is not as empty as it might seem with shipping routes, fishing, oil and gas exploration activities and ecological reserves being other interests competing for space at sea.

In context of the offshore strategy, the Commission stresses once again that it is important during the recovery of the current crisis to front load investment in offshore renewable energy where possible, as this is will boost jobs and economic activity and contribute to a green recovery and long-term sustainable, inclusive growth.

Potential of offshore wind energy

The European Commission is not the only one that sees potential in offshore wind energy. According to the International Energy Agency (IEA) offshore wind has the potential to generate more than 420 000 TWh per year worldwide; more than 18 times global electricity demand today!

Although current capacity does not come close to the estimated potential, offshore wind energy has grown rapidly in recent years. And with many new wind farms being developed or planned, growth is expected to continue. So far, the growth of offshore wind has been focused on countries bordering the North Seas, where high quality wind resources and relatively shallow water have provided exceptionally good conditions in which to develop offshore wind. As can be derived from the graph, Germany and the UK take up a large part of offshore wind capacity, although a group of smaller countries including Denmark, the Netherlands and Belgium are other front runners. For 2030 installed capacity is expected to multiply by four from 2018 levels of approximately 20 GW. With the ongoing development of the technologically more challenging floating wind turbines, other countries with deeper coastal waters (such as Spain) are likely to be added to the list of countries making use of offshore wind.

Source: International Energy Agency (IEA)

The IEA highlights one other important advantage of offshore wind energy; it is the renewable technology that comes closest to providing a baseload power generation. New offshore wind projects have capacity factors of 40% to 50%, as innovations such as larger turbines make the most of available wind resources. Offshore wind output varies according to the strength of the wind, but its hourly variability is much lower than that of solar PV. Offshore wind has capacity factors close to those of efficient gas-fired power plants, exceeds those of onshore wind and is about double those of solar PV.

Source: International Energy Agency (IEA)

Cost effectivity of offshore wind energy

Cost effectiveness of offshore wind energy has improved enormously over the past years. To name an example, the Dutch Program for Offshore Wind, consisting of the development of five large scale offshore wind farms of 700 MW each, started in 2015 with a goal of 40% cost reduction from the initial estimated maximum feed-in tariff of 124 €/MWh. This cost reduction was supposed to be achieved over the course of five tenders but was directly achieved when in 2016 the first tender was won with a bid of 72,7 €/MWh. A combination of ongoing innovation for turbines, the scale of the wind farms, the tender method and low interest rates had speed up enormously the cost reduction. One year later, the second tender was won with a bid of 54,5 €/MWh. And the third tender was won by a bid not requiring any guaranteed feed-in tariff meaning no subsidy at all. At the same time in Germany (also subsidy free) and Denmark (49,90 €/MWh) similar results were achieved. So offshore wind energy can be profitable at market prices, although that is without taking into account grid connection costs which are generally paid for by the net operator and/or by public money. Next steps will be for projects to pay for (part of) the grid connection and for floating wind farms in deeper water to reach similar cost levels.

The potential for offshore wind energy in Spain

Meanwhile, sector organization Wind Europe representing the wind industry would be the last one to lower expectations. It fully agrees with the European Commission that offshore wind energy should be an important pillar in the energy mix. They have taken one step further than the Commission and have already calculated the quantity of offshore wind to be installed in each region. For Spain, Wind Europe estimates a capacity of 17 GW of offshore wind energy by 2050. Relatively small compared to the European total of 450 GW and the estimate for the North Sea of 212 GW, but enough to generate an interesting pipeline of projects for the industry and a substantial contribution to renewable electricity generation in Spain.

It is clear that there is no one size fits all solution in the energy transition. For future renewable generation we will rely on a variety of technologies, just like we have done in the past. And per country or even per region the mix will depend on local circumstances. For Spain, with abundant sun and enough scarcely populated areas, solar PV has more potential than offshore wind energy. For countries with less space and/or sun but with shallow seas, offshore wind energy will be more important. But for both it will be one of the technologies that together will make up the hopefully robust and efficient energy system of the future.

Rens van de Ven | Energy Consultant

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