The Energy Ministers of the 9 North Seas countries held their annual meeting yesterday in Odense, Denmark. They reaffirmed their ambition to transform the North Seas into “Europe’s green power plant.” They gave clear recommendations to the new EU Commission how best to support that. Notably on the need to further strengthen Europe’s wind energy supply chain. Also on the need to get hybrid offshore wind farms moving – by defining a cost-sharing formula asap and creating a new dedicated offshore financing facility. They also highlights the importance of involving the UK fully in all of this.
At yesterday’s North Seas Energy Cooperation (NSEC) Ministerial Meeting in Odense, Denmark, European and national politicians as well as industry representatives reaffirmed the strategic role of the North Seas as Europe’s future renewable energy powerhouse.
In a joint NSEC declaration, the Energy Ministers of Belgium, Denmark, France, Germany, Ireland, Luxembourg, the Netherlands and Norway yesterday identified six key areas of collaboration. Among them: the competitiveness of Europe’s offshore wind supply chain and the need to reinvent offshore wind financing.
Good news on the offshore wind supply chain
Europe needs to rethink its approach to offshore wind planning. With the large offshore wind volumes to be installed in the North Seas over the next years, national supply chain planning will not suffice. Investments in new and expanded factories require international cooperation and coordination at sea-basin level. A strong European supply chain is a prerequisite for the further build-out of offshore wind. It’s good that the that EU supports that now – with tighter pre-qualification criteria on cybersecurity, responsible business conduct and the ability to deliver on projects enshrined in law.
The NSEC recommendations call for a “digital transparency tool” that provides visibility for the entire wind energy value chain. The tool should serve as an overview of auction schedules, manufacturing capacities, equipment requirements and port capacities across the North Seas countries. Ultimately, it is envisaged to cover all of Europe, including the UK and Norway. Generally the NSEC recommendations call for “a more effective and constructive cooperation between the UK and NSEC.”
Supply chain bottlenecks remain, especially with regards to the availability of offshore wind installation and service vessels, port infrastructure, the expansion and reinforcement of onshore grid connections and the availability of skilled workers. But the European offshore wind supply chain is ramping up. By the end of 2025 Europe will be able to manufacture 9.5 GW of offshore wind turbines a year.
European companies are investing at least €10bn to build new factories and expand existing ones – for everything from wind turbines to foundations, cables and grid equipment. Europe must continue to facilitate access to capital, enable a level playing field with non-European competitors, boost the grid buildout – and the European supply chain will deliver.
Reinventing offshore wind financing
With the European Wind Power Package and the EU Grids Action Plan, the European Commission has taken a series of significant steps to back investments in the wind industry and its supporting infrastructure. The European Investment Bank (EIB) has stepped up to support for Europe’s wind industry with crucial counter-guarantees. But additional steps at regional level are needed to facilitate investments – not least in hybrid offshore wind farms which connect to two or more countries, energy islands and meshed grids.
The NSEC recommendations call for a new approach to offshore financing. Preliminary discussions on establishing an “offshore regional facility” to unlock financing at sea-basin level have started. The facility could support funding of meshed grid infrastructure and hybrid offshore projects and help overcome persisting questions on cost-, risk- and benefit sharing between the actors involved. Europe needs to set the regulatory framework and define a cost-sharing formula for hybrid offshore wind projects asap. Hybrid projects are the future of offshore wind in the North Seas and the focus must now be on getting the first projects built.
The facility would be based on voluntary cooperation between the European Commission, Member States, private investors and possibly non-EU countries which could support offshore projects. WindEurope welcomes the proposed “offshore regional facility.”
“Well done to the North Seas Energy Ministers for identifying exactly what needs to happen to increase momentum on offshore wind. And for spelling out clearly what the EU needs to do to on this over its new 5 year mandate. Further action to strengthen the supply chain. A big push on grid build-out especially for the cross-border “hybrid” projects backed up by a dedicated offshore financing facility. And the full involvement of the UK in all of this”, said WindEurope CEO Giles Dickson.
Background:
The North Seas Energy Cooperation is the intergovernmental forum supporting and facilitating the development of offshore grid and renewables development in the North Seas, including the Irish and Celtic Seas. It is made up by Belgium, Denmark, France, Germany, Ireland, Luxembourg, the Netherlands, Norway, Sweden and the European Commission. The UK had to leave the North Sea Energy Cooperation in 2020 as a result of Brexit
