building a more powerful europee680/energy/energy...areas and save on transmission costs, because...

Building a morepowerful Europe

SUPERGRID4PDF 20/09/2007 12:27

• The generation of power from windproduces no carbon dioxide emissions.This means a reduction of carbonabatement payments.

• Onshore, huge energy losses occur whenelectricity is transmitted long distances.Wind farms are dispersed in marginalareas and save on transmission costs,because they reduce the need to movepower long distances. Offshore wind,utilising HVDC technology, makes longdistance transmission more economic. Ithas fewer losses than conventionaltransmission technology. It generatespower on the network and facilitates themovement and trading of electricitybetween national grids.

Supergrid allows the economic utilisation ofthe wind resource further out to sea andcreates the infrastructure for an internalmarket in electricity.

I hope you will share in our enthusiasm tocreate Europe’s first truly continental andcommonly sponsored, energy project.

Eddie O’ConnorChief Executive OfficerAirtricity

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Airtricity is a world leading renewable energy company with a strong track record indeveloping, constructing and operating wind farms across Europe, North America and Asia.In 2006, as part of its offshore wind farm strategy, Airtricity announced plans for the creation ofa pan European subsea energy grid, called Supergrid.

The Supergrid will ultimately link a series of offshore wind farms through the Baltic Sea, the NorthSea, the Atlantic, the Bay of Biscay and the Mediterranean.

Following its vision for Supergrid, the company has embarked on a number of offshore projectsand is actively putting plans in place for the 10GW Foundation Project. The Foundation Projectwill consist of a number of projects in Dutch, German and United Kingdom waters,interconnected with one another and with their respective national grids. This will prove theconcept at a regional level and will form the basis for developing the Supergrid as a whole.

Introduction

Europe’s Energy ChallengeEnvironmental sustainability Security of supplyEconomic competitiveness

The challenge

It is now commonly accepted thatEurope is facing an energychallenge. Rising demand for energywill meet with decreasing fossil fuelstocks and increasing prices. TheEuropean population will be caughtin the middle.

The trio of environmentalsustainability, security of supply, andeconomic competitiveness continueto frame the debate on Europe’senergy future. The pressures appliedby these three forces requirerevolutionary answers.

Climate change

Climate change is the majorbackdrop to our decisions on ourenergy future. Energy is a majorsource of greenhouse gases, but anarea in which we have much of thetechnologies to hand. The challengeis the scale at which we must nowdeploy them.

Security of supply

The International Energy Agencyinforms us that oil supplies may belimited within five years. Predictionsare emerging of historically high oilprices. Supplies of fossil fuels aredecreasing and consolidating infewer hands. The argument on Peak-Oil has turned from “if” to “when”.Europe needs supplies of energy thatare domestic, secure andsustainable.

The value of wind

A key challenge will be to ensure noloss of competitiveness, in keepingwith the Lisbon Strategy. This is theleast well understood element of thedebate. The cost of renewables isdiscussed, but not their value,specifically the value of wind.

This value has five components.

• Wind reduces the marginal cost ofgeneration. When it blows, itreplaces the most expensive plantin a generation portfolio, thepeaking plant. The marginal priceof electricity drops, as does theaverage cost.

• Wind reduces the price of fossilfuels. It decreases the forward pricefor fossil fuels, reducing the cost of“brown power”. This is similar to thephenomenon in the Nordic market,where the supply of hydro increaseswhen the snow melts in the springand decreases the fossil fuel price.Studies in Mexico have shown thata 10% increase in wind penetrationbrings about a 10% reduction infossil fuel prices.

• Wind is fixed in price. The fuel is freeand the capital costs are known.Increased wind penetrationdampens exposure to escalatingelectricity costs. Increasing theamount of wind on the systemprovides a better cost/risk profileand reduces prices to theconsumer. Work by ShimonAwerbuch in Scotland show asaving of 6% as a result ofincreasing wind penetration from20% to 30%.

SUPERGRID4PDF 20/09/2007 12:27 Page 2

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Requirement for offshore wind

Europe has set itself the target. Theindividual member states willcontribute towards the overall targetto varying degrees, but windgenerated electricity will have tocarry the greatest share of renewableelectricity. In order to meet the20:20:20 target, offshore wind willhave to significantly contribute. Therequired amount of electricity fromwind, as calculated by the EUCommission, is such that givenconstraints onshore, at least a thirdwill have to come from offshore.

The Commission’s Analysis

The Transport and Energy Directorateof the European Commission(DGTREN), analysed the 20%renewable energy target anddivided it into sectors:

• According to DGTREN’s estimates,20% of energy from renewables willtranslate to 34% of electricitycoming from renewables by 2020.

• DGTREN also estimate that the vastmajority of renewables in 2020 willcome from only three sources:hydro, biomass and wind. Nearly allnew renewable generation willhave to come from wind andbiomass, as the vast majority ofpredicted hydro capacity is alreadyin existence.

• 36% of EU renewable electricity willneed to be generated by wind in2020, according to DGTREN. Acrossthe EU, this means that 13% of thetotal electricity supply will comefrom wind.

• The 36% figure for wind equates toat least 150GW of wind capacityinstalled. Given likely constraintssuch as planning and availability ofland, at least a third of this will beoffshore.

• These figures are supported by theanalysis of the European WindEnergy Association (EWEA). TheEWEA target for offshore is 60GW by2020, with a follow on target of150GW by 2030.

European Council, Presidency Conclusions, March 9th, 2007

Source: DGTREN

Europe’s targets and the necessity foroffshore wind20:20:2020% reduction in emissions20% renewable energyby 2020

Biomass 26%

Geothermal 1%

Hydro 32%PV 3%

Solar thermal 1%

“… the EU makes a firm independentcommitment to achieve at least a 20%reduction of greenhouse gas emissions by2020, compared to 1990......it endorses the following targets: a bindingtarget of a 20% share of renewable energiesin overall EU energy consumption by 2020....”

Share of Renewable Electricity in 2020

Wind 36%

Marine 1%


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Offshore grid technology

For technical reasons thetransmission of electricity offshoreover distances greater than 100km iscarried out using High Voltage DirectCurrent (HVDC) systems comprisingonshore converter stations andHVDC undersea cables.

In 1954, the world’s first commercialHVDC link based on mercury arctechnology went into operationbetween the Swedish mainland andthe island of Gotland. Around 20years later, in the early 1970s, thethyristor semiconductor started toreplace the mercury arc convertersand have been the standard HVDCtransmission technology for thepoint-to-point transmission of powerbetween AC grids ever since.

However, over the last ten years anew technology has beendeveloped by ABB called HVDCLight® based on transistors. Thistechnology is more flexible and issuitable for connecting islandedsystems (such as offshore windfarms) to AC grid systems, supportingAC grids with voltage control andforming the multi-terminal networksnecessary for the Supergrid.

ABB has implemented severalsystems using this latest technologyincluding supplying power to the Trollgas platform 68km off the coast ofNorway and the 350MW Estlinkinterconnector between Estonia andFinland.

This technology is now commerciallyavailable at 300kV and can transmit1080MW on a pair of subsea cableseach of diameter 94mm (image ofactual size cable on oppositepage).

Offshore grid topology

The main benefits of the Supergridcome from combining theconnections from offshore windfarms to shore with interconnectorsbetween grid systems. The topologythat results is that of interconnectorsbetween countries being formed bylinking up one or two offshore windfarms with each other and with thegrid systems of two or morecountries.

Offshore grid costs

Offshore transmission costs canequate to 10-20% of the total costsassociated with an offshore windfarm and so a more cost-effectiveutilisation of the offshore transmissioninfrastructure will be significant inproducing least-cost renewableenergy.

The Supergrid topology both allowsa greater utilisation of offshore windfarm connections to shore as theycan be used for intra- or inter-systemtrading when the wind farms are notat full output, and forinterconnections within andbetween grid systems at a lowercost. Just looking at theinterconnection aspect alone, whenoffshore wind farms are more than60-70km from the onshore grid, itcan be more cost-effective tointegrate them using the Supergridtopology than with the conventionalradial connections.

The conceptTwo established technologiesTwo experienced players

Technical aspects of the SupergridProven technologyCost effective

Country 1 Country 2

The Concept

The Supergrid brings together twoestablished technologies to powerEurope; High Voltage Direct CurrentTransmission; and offshore windturbines.

Supergrid provides an energyinfrastructure that spans thecontinent, interconnecting marketsthroughout Europe. While power isgenerated on the network, it alsofacilitates the trading of electricity,creating the infrastructure for a trueEuropean internal market inelectricity.

The scale of the grid allows for thecapturing of the offshore windresource across all the oceans ofEurope. The transmissiontechnology allows for the optimalexploitation of the resource, as it hasfewer transmission losses overdistance than conventionaltransmission technology.

The flexibility of the transmissionsystem, allows it to incorporate newoffshore technologies as they comeonstream. The Supergrid’s scale willresult in further development of thecore technologies involved, leadingto economies of scale andtechnological breakthroughs.

The catalyst will be provided byAirtricity and ABB, two world leadersin their respective fields.

Experienced offshore wind farmdeveloper

Airtricity has a strong track record inoffshore development.

• Together with GE Energy, Airtricityco-developed the first phase ofthe Arklow Bank project off theeast coast of Ireland.

• Through a joint venture partnershipwith Fluor, Airtricity is developingthe 500MW Greater Gabbardproject off the coast of Suffolk inEngland, around the InnerGabbard and Gallopersandbanks.

• Airtricity is also developing the300MW Butendiek wind farmlocated 34 kilometres off the coastof Sylt in Northern Germany.

• In the Netherlands the company isaiming to develop 4 wind farms inthe North Sea (‘West Rijn’,‘Breeveertien’, ‘Den Helder’,‘Noord Hinder’) with a total of2600 MW.

Experienced offshoretransmission provider

ABB – Power and productivity for abetter world

“We have today established anadvanced transmission technology,HVDC Light®, for demandingoffshore applications to feedelectricity to platforms but also toconnect and support integration ofelectrical networks. We have workedvery closely with Airtricity on thetechnology aspects of their conceptfor an EU Supergrid Project andhave concluded that this Europeantechnology fits well with their plansto construct an offshore grid.”

Bo Normark, Senior Vice PresidentMarketing and Sales, ABB GridSystems

Act

ual s

ize

of HVDC Light cable (cross section)

Key:

Electricity Grid

Flow of Electricity


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The role of Supergrid in Europe’s energy futureThe role of Supergrid in Europe’s energy future

The diagram on the opposite pageoutlines a scenario of Europe’senergy future over the next thirtyyears and provides a context to theSupergrid. It plots the potentialdevelopment of two streams; thefossil resource stream; and therenewable resource. It also broadlyshows the areas where they interlink.

Parallel paths

Blue boxes represent the commonguiding forces: increasing tensionover diminishing fossil resources; andmore use of renewable electricity.

The next three decades will see anincrease in tension betweensuperpowers over diminishingresources. International geopoliticswill increasingly be shaped bycompetition for resources.

This necessarily results in a largeincrease in renewables. Risingenergy demand and decreasingsources will result in the use of morevaried sources of energy andrenewable electricity will have to filla substantial portion of the gap.

Fossil resource stream

Competition for the remaininghydrocarbons will intensify in thenext decade. The resultantincrease in prices will encourageinvestment and exploration intoenergy products to replace fossilfuels.

Over ten years this leads to theredesign of energy using products,for example, the internal combustion(IC) engine being redesigned infavour of an electric engine.

Within 20 years, the use of oil andgas is only feasible in areas where itis uniquely useful, such as in thedevelopment of plastics,pharmaceuticals, and aviation fuel.

Within 30 years, no new fossil firedgeneration plant is being built.

Renewable resource stream

The renewables stream diverges intwo directions: development of newtechnology and improvements incurrent technologies.

New Technology

R&D progresses into new renewabletechnologies.

Increases in R&D results in the earlyemergence of ocean renewablessuch as wave and tidal over thenext ten years. Their massdeployment follows over the nextdecade.

The R&D process results in theemergence of “blue sky” energytechnologies, towards the end ofthe next ten years. Theirdeployment occurs approximately20 years after initial emergence.

Current Technology

There is a considerable increase inthe amount of renewables deployedacross Europe, particularly wind,photovoltaic and solar thermal.

The national grids are redesigned tofacilitate the greater developmentof renewables over the next tenyears. This encourages theintegration of differing countrymarkets and the eventual inclusionsof markets in the E.U. and states inthe U.S.

Intercontinental trade in electricitydevelops over the following tenyears.

Intercontinental electricity gridsdevelop within thirty years.


10GW Foundation Project

The first step towards the Supergrid is the 10GW Foundation Project. The Foundation Project will consist of anumber of projects in Dutch, German and United Kingdom waters. These projects will be interconnected withone another and with their respective national grids. This will prove the Supergrid concept at a regional level.The connected areas will be sufficiently far apart to prove the smoothing effect in electricity supply from windfarms over a broad area.

The 10GW Foundation Project is the first ever project intended to supply power simultaneously to threedifferent national electricity systems. It is a large project, and not one which Airtricity seeks to accomplishalone. Airtricity proposes to establish a consortium of progressive companies to develop, finance and buildthe project. Airtricity proposes to lead this consortium.

Location North Sea interconnecting three countries: United Kingdom, the Netherlands and Germany

Area 3,000km2 (approx.)

Number of turbines 2,000

Turbine capacity 5MW

Water depths 30-50 metres

Operational date 2017-2019

Tonnes of CO2 avoided p.a. 30,000,000 (if coal); 17,200,000 (if gas)

Cars taken off Road p.a. at least four million

Homes powered 6,250,000

Tonnes of fossil fuels saved from 7,000,000being imported p.a.

Wind Farm Capital Cost €2.5m/MW

Wind Turbine Foundation Life Time 50 years

Transmission Cables Life Time 50 years

Life time of other assets 25 years

Repowering costs after 25 years €1.25m/MW

Capacity factor 40%

Offshore Transmission Costs €2.5bn

Proportion of offshore transmission costs recovered from wind farm 2/3

Proportion of offshore transmission costs recovered from trading 1/3

Gearing 75%

Cost of debt 7.0%

Cost of equity 20.0%

Electricity costs for the first 25 years of operation of the 10GW projectare estimated at €108/MWh and for the second 25 years at €63/MWh.These figures are based on the following:

“As a matter of fact, Ihave discussed thesuper wind grid, as itis called, with

Chancellor Merkel. It is potentially avery exciting project for a huge windfarm in the North sea…”

U.K. Prime Minister (Tony Blair), Houseof Commons, February 7th, 2007.

“Opportunitiesprovided by the TEN-Escheme should beexamined and work

on a European offshore super-gridshould be initiated.”

Communication from the Commissionto the Council and The EuropeanParliamentRenewable Energy Road Map,Renewable energies in the 21stcentury: building a more sustainablefuture, January 10th, 2007.

“We will work with theEuropeanCommission andother national grid

operators to develop an offshorewind farm grid connection system topower the rest of Europe.”

Fianna Fáil & Green Party, IrishProgramme for Government, June 13,2007.

“The supergridproposal to linkmember statesoffshore is therefore

very much in line with our goal ofintegrating national EU energymarkets by removing barriers to thefreer flow of energy around Europe.”

Malcolm Wicks, U.K. Minister forEnergy, Adjournment Debate Houseof Commons, June 16th, 2006.

''It is thereforenecessary thatCommission comesforward with a

European action plan on off shorewind. Such a strategic action planwould be an absolutely importantapproach. It should mainly show aperspective how to reach such offshore goals, describe a "one-stop-shop approach" and together withthe most welcomed proposal of aEuropean Strategic EnergyTechnology Plan, it should pave theway towards a European offshoresupergrid. It is in Europe's interest torealize such projects.”

Mechtild Rothe, German MEP andVice President of the EuropeanParliament.

Excerpt from her speech on theEuropean Wind energy conference inMilan in May 2007.

“Getting large scaleoffshore windcompetitive within theshort term and paving

the way towards a competitiveEuropean offshore supergrid.”

Communication from the Commissionto the European Council and theEuropean Parliament an Energy Policyfor Europe, January 10th, 2007.

“So the Commission isproposing nothingless than a newindustrial revolution in

energy policy, increasing the presentlevel of non-hydro renewables – suchas wind, solar, PV, biomass, andbiofuels - by more than 6 timespresent levels in about 12 years.

It is truly ambitious, but also possible,with major increases in wind and thedevelopment of a major off-shoreEuropean supergrid, more biomass forheating, biofuels will need to becomea real and every day part of the livesof European citizens, more solar andpv and new technologies such aswave.”

Andris Piebalgs, Energy Commissioner,Energy for a Changing World: TheNew European Energy Policy, Speechat the EU Energy Law and Policyconference, Brussels, 25 January 2007.

“We want to see aprogramme ofproposals (forEurope), including

more investment in renewablestechnology, including secondgeneration biofuels and offshorewind.”

NL Prime Minister Balkenende in aletter with Tony Blair to Finnish PrimeMinister Vanhanen, 19 October 2006.


Republic of IrelandAirtricity HeadquartersAirtricity HouseRavenscourt Office ParkSandyfordDublin 18

Tel: +353 1 6556 400Fax: +353 1 6556 444Email: [email protected]

Northern IrelandAirtricity Energy Supply Ltd.2nd Floor83-85 Great Victoria StreetBelfastBT2 7AF


Great BritainAirtricity Developments UK Ltd.16 Robertson StreetGlasgow G2 8DSScotland


Airtricity Offshore U.K.Abbots PlaceWalnut Tree CloseGuilfordSurrey GU1 4RW

Email: [email protected]

USAAirtricity Inc.401 North Michigan AvenueSuite 3020Chicago,IL 60611

Tel : + 1 312 923 WIND (9463)Fax: + 1 312 923 9469Email: [email protected]

www.airtricity.com

Project DetailsChris VealDirectorEmail: [email protected]

Canada45 St. Clair Avenue West, Suite 102,Toronto,Ontario M4V 1K6

Tel : +1 416 603 8181Fax : +1 416 603 8191Email: [email protected]

GermanyMarienstr. 19/2010117 Berlin

Tel : +49 30 284 82 290Fax : +49 30 284 82 299Email: [email protected]


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