Governance simulation for the Northern Seas offshore grid

Abstract

The development of the offshore grid of the Northern Seas of Europe is accelerating due to the deployment of offshore wind power and of multiple interconnectors. This grid is a priority corridor of the new European climate and energy strategy, the Energy Union. The offshore transmission links composing an offshore grid have two functions: interconnecting onshore power systems, and connecting offshore wind farms to these power systems. Traditionally, the first function is realized by interconnectors, and the second function by links connecting wind farms or wind farms hubs directly to the national onshore system. However, the offshore grid could be integrated, with transmission links performing both functions simultaneously. Research has shown that an integrated grid provides greater net benefits to society than a non-integrated one, but current development for the Northern Seas is not integrated - very few of the offshore wind power and transmission projects in the region involve more than two countries. This because despite its advantages, integrated development faces many barriers, the main one being the governance of such a grid under its different governance aspects. We represent path dependence in transmission and generation expansion with a myopic investment model, developing governance constraints. Despite the small share of transmission in total investment costs, governance constraints impact the offshore grid layout and technologies, the net benefits and their distribution among countries and actors. Moreover, due to path dependence and myopia, constraints do not necessarily reduce total net benefits. This is a relevant and unconventional result made possible by a myopic model, although it is necessary to reduce snapshot myopia. Previous studies of the Northern Seas offshore grid highlight governance barriers, and indeed we demonstrate with a quantitative model their significant impact on the offshore grid, reducing net benefits by more than 4. We conclude that modelling governance constraints is necessary to develop suitable and realistic governance policies that lead to more beneficial expansion pathways – though these preferred pathways may not be the unconstrained ones.