Thursday

2nd Feb 2023

Opinion

Why is offshore wind the 'Cinderella' of EU climate policy?

  • Wind power will be the principal delivering technology of the Green Deal in the European Commission's strategic long-term vision for climate-neutral economy (Photo: Kim Hansen)

Last year, 2020, saw seismic energy policy shifts across the industry. The global gas-market remains bearish and extraordinarily oversupplied, with gas prices seeing increasing downward pressure and volatility. Whereas, in the face of global turmoil, the offshore wind power industry continues to thrive.

The unprecedented year of new offshore wind farm installations resulted in a total of over 35 GW capacity operating across the globe by the end of 2020.

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From the long-term perspective, the Ocean Renewable Energy Action Coalition (OREAC) has set a goal of 1,400 GW by 2050, which means an accelerated pace of global roll-out of offshore wind generation projects.

On 14 July, the European Commission unveiled its long-awaited 'Fit for 55' package, seeking to overhaul EU regulation that lines up with the bloc's target of reducing greenhouse gas emissions by 55 percent by 2030. This involves a new 2030 renewable energy goal. According to the latest European Commission's impact assessment it ought to be at least 38-40 percent, in place of the current 32 percent renewables target.

That means that the EU requires 433-452 GW of wind energy capacity by 2030 - a threefold increase on the 179 GW installed today.

Wind power will be the principal delivering technology of the Green Deal in the European Commission's strategic long-term vision for climate-neutral economy.

Hitting the bloc's decarbonisation goal will require a 25-fold increase in offshore wind capacity. And an even bigger build-up in the number of new onshore wind capacity.

Industry can deliver the volumes pending a robust EU industrial renewables policy that guarantees that such a grand huge wind power expansion is made in Europe and that the industry is cost-competitive both within and outside the EU.

Technology is not the main barrier to the deployment of wind energy needed for the Green Deal however.

The European energy market is quite complex, serving millions of households and business round the clock. Presently, there are no market mechanisms for offshore grid development projects to be bankable. Countries have diverse capital programmes and market operation rules which hinder investment flows in offshore hybrid projects from being discharged.

The vagueness on future market design and revenues for offshore wind farms prevents the process of an integrated offshore grid deployment.

Grid gridlock?

Today, Europe invests about €40bn a year on grids, which is not enough. In order to expand and optimise Europe grid infrastructure. annual investments in grid infrastructure shall go up to €66-80bn per year over the next 30 years.

Efforts will be needed at offering clarity via regulatory changes to the EU Electricity Regulation, particularly it shall be better addressed how offshore wind projects will be dealt with when it comes to congestion income distribution and cross-border capacity allocation.

The benefits of an accelerated development will be substantial. The EU wind energy sector generates €37bn to EU GDP, operates 248 factories across the EU, and each new wind turbine installed in Europe would contribute €10m of economic activity.

Offshore wind energy is one of the most promising and cost-competitive source of power generation in Europe.

But present policies will not deliver these numbers – neither on volumes, nor on economic benefits. Higher goals are necessary but not sufficient.

Europe requires stronger delivery, monitoring, and enforcement mechanisms to make sure that 2030 is a stepping stone towards a climate-neutral energy system.

Author bio

Elina Morhunova is a European and international business lawyer, and PhD researcher in international energy policy, and a former assistant to Lithuanian Renew Europe MEP Petras Austreivicius.

Disclaimer

The views expressed in this opinion piece are the author's, not those of EUobserver.

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