Countries around the North Sea need to implement a harmonised regulatory and economic framework to fully exploit the potential of a meshed offshore grid, according to the EU-funded Promotion project.
The call from the Progress on Offshore Meshed HVDC Transmission Networks (Promotion) project came in the initiative’s latest report – ‘D7.9 Regulatory and financing principles for a meshed HVDC offshore grid’.
The report summarises the key findings on the design of a legal, regulatory and financing framework for cross-border HVDC offshore connections and provides recommendations for policymakers and other stakeholders to enable the first hybrid assets to be built.
In the short term, the report recommends that improvements must be made to the governance and the regulation of the internal market for offshore electricity by including in the Electricity Regulation a definition and “substantive provisions on the regulation of a hybrid asset that combine both interconnections and wind farm export functionalities”.
It also recommends that innovation funding should be provided for novel ideas and technologies, such as energy storage, and ways should be found to generate anticipatory investment.
Support should also be provided for early communication between developers, authorities and other key stakeholders about new wind farm projects to “enable early identification of meshed offshore grid development needs”.
Opportunities for wider stakeholder involvement in the decision making process should also be identified, the report said.
Cross-border cost allocation (CBCA) should be formalised as a binding contract between involved parties with a clear specification of non-compliance penalties.
The report said CBCA coordination is “one of the most important pillars in the economic framework and should be promoted for complementary projects”.
In the longer term to provide regulatory stability Promotion recommends EU member states, third countries and the EU to consider the adoption of a North Sea treaty, containing the aims and principles of the offshore grid.
“This treaty would provide a stable governance and decision-making structure, a common interpretation of maritime law, and processes for long-term wind farm and grid planning,” the report said.
A treaty would allow for formal operational regulatory governance, fixing the terms of cooperation between National Regulatory Authorities and the various decision-making process regarding cross-border links.
Long-term legal and regulatory stability is especially important for financing the offshore grid, Promotion added.
“Investors rely on stable and predictable conditions which includes an assignment of clear roles and responsibilities among the relevant actors,” it said.
Equity provision for the required offshore grid investment volumes needs to be facilitated and the report presents several ways in which this can be realised.
TenneT chief operating officer Tim Meyerjurgens said: “The development of a cross-border HVDC grid is one of the most promising opportunities for a sustainable energy future in Europe.
“TenneT is cooperating closely with other TSOs to develop the idea of a meshed and efficient offshore grid in the North Sea, which requires the creation of a common regulatory framework. Promotion’s research shows the way to make this happen.”
DNV GL Energy chief executive Ditlev Engel said: “The development of a reliable transnational European offshore transmission grid is a key enabler for a successful, cost effective and timely energy transition.
“This project delivered a great framework with regulatory and financial guidelines for national governments to speed up collaboration on the joint development of energy infrastructure such as offshore transmission grids.
“And that is really needed to accommodate the rise of renewables and meet our goals in the Paris Agreement.”