Expansion Governance of the Integrated North Seas Offshore Grid

The expansion of offshore power transmission and generation in the North Seas of Europe is accelerating rapidly. This is due to several drivers, including the decarbonization and reform of the European power system, and innovations in offshore wind and high-voltage direct current transmission. So far, this European North Seas offshore grid is composed of conventional transmission lines, which perform the interconnection of onshore power systems and the wind farm connection functions separately. An integrated offshore grid is an innovative concept where some of the transmission lines perform simultaneously both the interconnection and connection functions. Earlier research leveraging optimization approaches already demonstrated that such an integrated offshore grid can provide socio-economical, technical and environmental benefits. The offshore grid is characterized by its multiplicity of actors, working in several levels, from the European to the sub-national. This makes governance the only adequate decision-making mode to manage the grid expansion towards more integration. Governance combines hierarchies, markets and networks in order to guide decision-making in a networked multi-level, multi-actor system. The expansion governance of the offshore grid can be analyzed according to six building blocks: meta-governance, planning, financing, ownership, pricing and operation. Previous studies have identified important barriers in these building blocks for the development of an integrated offshore grid. These comprise the difficulties in the site planning and development of integrated projects, the allocation of costs and benefits among actors, and the compatibilization of national support schemes to offshore wind. This research applies an exploratory approach to expansion governance to understand how the offshore grid can be managed towards more integration in the presence of these barriers. Therefore, it does not prescribe investments in specific offshore wind farms and transmission corridors. This approach combines energy systems modeling and regulatory analysis to focus on the management of investments in offshore assets, which are central to developing an integrated grid. The Offshore Grid Exploratory Model (OGEM) was developed in this thesis to endogenously represent integrated governance barriers: the complexity of planning integrated lines and the interests of individual North Seas countries. OGEM confirms that an integrated offshore grid is beneficial to Europe. However, these benefits are highly dependent on the e-Highway2050 scenarios used, and asymmetrically distributed between countries and actor groups. Governance barriers (represented as model constraints) lead to a modest reduction in benefits, and do not change the distribution asymmetry. The impact of the barriers is more pronounced regarding investment changes in transmission technologies and integrated lines. They increase path dependence and hinder the deployment of multiterminal HVDC lines. Also, the location and potential of offshore wind interacts with investments in offshore transmission, both of which can change radically in the presence of governance barriers. The impact of these barriers on the offshore expansion pathways allows to recommend design principles for governance frameworks of offshore investments. These comprise the need for: a comprehensive expansion candidate portfolio including both non-integrated multiterminal HVDC and integrated projects; to consider the interrelation of expansion periods in planning; and to consider different rates of innovation for transmission technologies. In parallel, the Clean Energy Package is analyzed for the changes they bring to the European regional governance of offshore expansions. Five challenges are identified. The first two deal with the interaction of the governance structure of the European and national levels with the regional one. Then, the third challenge deals with the participation of the United Kingdom and Norway in the European expansion governance. On the other hand, the las two challenges concern specific governance building blocks. The planning challenge indicates that the regional planning of the offshore grid is dependent on national development plans, which in their turn must consider national interests. And the pricing and financing challenge indicates that cost allocation for Projects of Common Interest rigidly precedes the application for financing, invalidating the cost allocation in case the application is unsuccessful. Importantly, these challenges are largely unaddressed by the Energy Union reform. The thesis concludes with a number of policy recommendations. They concern meta-governance and the need for capacity building at the regional level. Then, multiple recommendations cover planning. Beyond following the design principles above, the planning challenge needs to be solved. Also, planning models and data should move towards open-modeling approaches which would facilitate the consideration of a broader candidate portfolio. Regarding financing and pricing, the regulation should foster more anticipatory investments than the current practice, and the Projects of Common Interest cost allocation and funding challenge should be solved. These recommendations constitute specific changes to the European expansion governance which would significantly improve the playing field for an integrated offshore grid.The doctoral research has been carried out in the context of an agreement on joint doctoral supervision between Comillas Pontifical University, Madrid, Spain, KTH Royal Institute of Technology, Stockholm, Sweden, and Delft University of Technology, the Netherlands.QC 20181018