Let’s remove the offshore wind capacity cap – but HOW?
Falling prices – a good news?
The offshore wind industry is still euphoric about the great progress that has been made with respect to cost reduction. The cost reductions have become strongly visible in the published auction results across Europe.
Strike prices per MWh – far below a previously discussed 100€ benchmark and only slightly above 50€ per MWh – have been dominating the discussions on offshore wind.
Having answered the question “can we meet the cost reduction targets?” with a clear “yes – and we even can deliver even better results!” – several new questions arise:
- Will these new price levels lead to further expansion of the national and European targets for offshore wind?
- Can the industry fulfil the announced prices? Are we able to build and operate at this low level offshore wind?
- Will we see further cost reduction as digitalization supports the further improvement of O&M Services?
- Is this all just bubble? – Are these prices just a typical market change reaction that will soon disappear and return to a higher pricing level instead?
- Or even worse – Are these prices putting a thread on emerging and less mature markets?
These and many more questions have been asked and heavily discussed amongst the 200 participants at the 14. Hamburg Offshore Wind Conference on April 4 and 5.
Good news at the opening: German offshore cap is not set in stone
He paved the way for exciting news from the Director General Waterways and Shipping of the Federal Ministry of Transport, Reinhard Klingen, that an offshore wind cap of 15GW in 2030 is not set into stone. Following this announcement, the community of the conference discussed the implications of a potential increase of the German offshore cap while enjoying the dinner and networking event in the evening
The second day started with a political discussion on the role of offshore wind after 2020 in the generation portfolio in a new European energy system.
A set of various speeches and presentations gave impulse to the discussion about the role of the different stakeholders and market players in the new market environment. I kept in mind “Auctions seem to be fun, as long as you win them ”. A common understanding was that collaboration is the key to it, This was also mentioned in the opening statement of Ditlev Engel, CEO DNV GL Energy, which was much appreciated. But how?
“Pre-bid collaboration or post-bid collaboration?” was one of the core questions discussed in a very open and productive way during the day.
The second topic which was touched upon by several speakers was how to assess the right market size to allow sustainable market growth and market development to exploit the full cost reduction potential.
The conference closed with a panel discussion on the possibilities and limitations of the electricity grid. Thevery clear, non-technical and open manner of the panel allowed for an interesting debate also with non-grid experts.
The German market notes
The situation in Germany currently was dominated by the first auction deadline, Monday, April 3. The envelopes handed in by approximately 20 players of course were relieved on one headache less but still excited as of the coming results and enriched on one experience more.
For offshore wind in Germany I noted that the cap on the offshore wind targets that we discussed heavily before the last revision of the EEG, is “just a number in a law” and laws are meant to be changed. However, the falling cost for energy from Renewables are still not visible to the consumers and thus we are facing not only welcoming words when asking for more installations at sea and at land…
Silo thinking is not the right way to go. The interaction of the various international offshore countries (markets) is therefore of great importance to serve the different plays with a global and harmonized market stabilize growth. In addition, also the other renewable energies need to be kept in mind – by far not as a competition to offshore but as a contribution to the whole new energy system, thus even we now have a WindSeeGesetz setting offshore into a separate regulation.
Maybe the future is in a technology independent regulation or already the free market for offshore wind? Who knows…?