PowerPoint Presentation

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

More than 700 members from almost 60 countriesManufacturers with a leading share of the global wind power marketComponent suppliersResearch institutesNational wind and renewable associationsDevelopersElectricity providersFinance and insurance companiesConsultantsContractors

This combined strength makes EWEA the worldslargest and powerful wind energy networkwww.ewea.org/membership

EWEA Lead SponsorsTackling 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 termAn economically viable power system with large amounts of RES will require changes in all 3 areas

Source: IEA 2011, Harnessing Variable Renewables With an increasing supply of variable RES, improved infrastructure and access to flexibility resources become necessary. Sources of flexibility to balance variability include dispatchable (or flexible) power plants, demand-side management and demand response, energy storage facilities and increased interconnection with adjacent markets4Momentum for grid development in Europe is evident

Already in September 2009 EWEA published its Offshore Network Development Master PlanNorth Seas Countries Offshore Grid Initiative signed by 10 countries in 2010 ongoing workOffshore Grid is a key part of the European Infrastructure Package Second ENTSO-E 10-year network development plan in the makingBoth the Cobra cable and Kriegers Flak have been awarded financing from the EUs Economic Recovery Plan. In the aftermath of the financial crisis, the EU elaborated an Economic Recovery Plan complementary to its Member States. A substantial part of the money was earmarked for energy infrastructure projects, innovative, but that could start spending in a short time frame.

Kriegers Flak qualified as it will be, ultimately, a 3-way interconnector whilst Cobra cable qualified for the financing as it will have a plug along it in which the numerous German offshore wind farms should be able to connect to.5Prominent grid infrastructure projects:

UK/Norway under consideration NorGer - Germany/Norway ministerial agreementKriegers Flak (Germany Sweden and Denmark on hold) with EERP financingCobra 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)EWEAs 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 2020150 GW by 20307Global cumulative wind power capacity 1990-2007 (MW)EWEAs 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

8Lines/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 designThere are three basic elements which will form the backbone of the future offshore transmission network:Lines/branches: consisting of submersed cables characterised by transmission capacity, Offshore nodes consisting of offshore platforms containing HV DC conversion equipment, switchgear and so on 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 which will interconnect the offshore transmission grid to the onshore transmission grid.Global cumulative wind power capacity 1990-2007 (MW)EWEAs 20 year offshore network development planSource: EWEA 2009

All layers animated10EWEA 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 consumersBUT: Iceland not yet part of these considerationsBenefits predictable energy output and less need for additional balancing capacity wind power can be sold to more than one country possibilities of power trading between countries minimised strengthening of onshore interconnectors high voltage networks possible reduction of GHG of oil and gas platforms through connection to the grid connection opportunities to other marine renewable energy sources more economical utilisation of grid capacity through shared use more energy security more interconnection capacity means more additional firm power

=> The future European grid will contribute to building a well-functioning single European electricity market that will benefit all consumers12Current 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-EAgreement on Trans-European Networks Main elements: Priority infrastructure corridors agreed all renewables focussedNorthern Seas offshore gridNorth-South electricity interconnections in Western EuropeNorth-South electricity interconnections in Central Eastern and South Eastern EuropeBaltic Energy Market Interconnection Plan in electricity

Priority thematic areas agreedelectricity highwayssmart gridsnational/regional TSO coordination (along the lines of CORESO, CECRE)PICs and PTAs have:Permitting and planning deadlines of 3 years (binding...)Access to CEF/TEN-E fundingA European Offshore/SupergridWhat 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.

take into account the long-term economic benefits of improved transmission, as demonstrated in European transmission studies (TradeWind and EWIS)15Recommendations for IcelandExplore bilateral cooperation possibilities in energy policy in generalParticularly with the UK (in progress)

Make best use of regional cooperation fora North Seas Countries Offshore Grid InitiativeENTSO-E regional group for North Sea grid development

Use EU legislationRenewable Energy Directive 2009/28 cooperation mechanisms Recommendations for IcelandExplore business case for electricity exports to UK

Explore feasibility of HVDC interconnectors Address technology challengeAddress 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 difficultPrivate 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

EWEAs next 20 Year Offshore Network Development Plan?

Thank youwww.ewea.orgEWEA80 RUE DARLONB-1040 BRUSSELS

T: +32 2 213 1811F: +32 2 213 1890E: ewea@ewea.org

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