Low-carbon Projects Demand a New Transmission and Distribution Model

So much for German efficiency. The country may have made a bold attempt at promoting offshore wind power, with a slew of spectacular projects taking shape off the coast and an ambitious target to install up to 26 GW of power by 2030.

But, right now, a lot of the existing offshore estate is idling away for the simple reason that it does not have a grid connection. The transmission grid operator entrusted with providing the links, TenneT TSO GmbH, says it cannot do the job without changes to the way the market operates.

The affair could be seen as a legitimate claim by a supplier put in a difficult situation by the German administration’s decision to abandon nuclear and place a heavy bet on offshore wind power. No one doubts that laying cables is tricky. It could also be viewed as a move to force concessions at a time when the grid operator knows it has the government over a barrel: one of the main bones of contention, ironically, is who will be liable if connections are not provided on time.

Either way, what started out as a bit of a joke – last December Der Spiegel noted how RWE’s Nordsee Ost wind farm, far from delivering clean energy, was burning diesel to keep its turbines in working order -has rapidly turned serious.

Siemens, the contractor for Germany’s offshore transformer stations, has booked almost €500 million in charges, according to Dow Jones. RWE is set to lose more than €100 million at Nordsee Ost. 

And E.ON’s head of Climate and Renewables, Mike Winkel, is on record as saying that no one, at E.ON or anywhere else, will be investing if the network connection is uncertain.

At the end of May 2012 TenneT was said to be in promising talks with the Merkel administration. The matter is still far from over, though. And markets elsewhere seem to be taking heed, on paper at least. Scotland’s First Minister Alex Salmond has touted the benefits of NorthConnect, a planned venture between British and Scandinavian electricity grids that is, according to sources, expected to be operational before 2020.

UK Prime Minister David Cameron has also publicly supported the project, which would be the world’s longest subsea electricity link. Steve Holliday, chief executive of National Grid, which is working on the link alongside Norway’s Statnett, says the two companies are looking to invest more than £1 billion (€1.3 billion) on what would be the first link between the UK and Norway. 

“Using state-of-the-art technology, the interconnector will give the UK the fast response we will need to help support the management of intermittent wind energy with clean hydro power from Norway,” he says. “It would also enable us to export renewable energy when we are in surplus. At this very moment a seabed survey is underway in the North Sea, looking at the best way to design and install the cable, which would run through very deep water.”

This is all welcome news, but a lot more is needed. While Britain sets its sights on the Norwegian interconnector, a domestic dispute focused on the Scottish islands exemplifies a wider European challenge. Currently the UK energy regulator Ofgem is in the process of setting the rate National Grid can charge customers, with a new transmission price control expected to provide a more predictable and transparent cost framework.

As a result, developers have been dragging their heels when it comes to hooking up projects to the grid, an issue that National Grid says is to do with timing and regulatory underpinning. 

Whatever the case, it’s got the makings of a headache for all concerned, and echoes the lack of co-ordination that is plaguing offshore wind in Germany. 

Essentially, what appears to be happening across Europe is that nations are falling in love with offshore wind, permitting grand projects far out to sea – and then belatedly realizing that it is not so easy to get the energy back to shore. 

It is a bit like building hotels in the desert and forgetting to put the roads in. How come some of the world’s most advanced and industrialized countries are committing such a colossal oversight? 

The problem is one of mindset. Ever since the first days of electricity, there has really only been one model for energy distribution. You build a generating center, more or less wherever you want it, and then create outbound distribution links to whoever needs power. 

This hub-and-spoke model is deeply ingrained in every aspect of energy distribution, from how utilities and grid operators work to the way regulators and policy makers think. But for renewable energy, it does not work. 

You cannot just put a wind farm wherever you want. In fact, in the case of offshore wind, the locations you have could hardly be more inconvenient from an energy transport point of view. 

That means grid connections almost need to come first in the thinking about offshore wind. How expensive will they be? How feasible? How can the costs and installation timeframes be reduced?

These questions are fairly obvious, and are nothing new. One renewable energy veteran remembers speaking to an oil and gas representative a few years ago, who said that if we were really serious about renewables then the first thing we would have to change is the grid.

Needless to say, that has not happened. If the issue is not addressed soon then every offshore market runs the risk of having an experience like Germany’s.

To be clear, this is not just about national priorities. 

Operators, regulators and national administrations need to think on a regional and even continental scale, because when wind energy comes ashore there is every chance the greatest demand for it may be far, far away.

Furthermore, this is not purely about wind energy, either.

In May 2012, the German Institute of Renewable Energy Industry proclaimed a new world record when Germany’s solar photovoltaic plants fed 22 GW of power into the grid, covering almost half of the nation’s total energy requirement.

The record demonstrates the level of impact that solar energy can have even in a moderately sunny country such as Germany. What will happen in Europe in the future on windy, sunny days? Where will the surplus energy go? 

Back in the UK, offshore wind is not the only form of energy that will be coming from the sea in the future. Britain also leads the world in the development of wave and tidal power technologies.

Yet is anyone planning to see whether offshore wind and tidal or wave locations can share grid connections? At the moment it does not seem so. Quite the opposite, in fact. The upcoming UK white paper on energy appears to contain scant consideration of grid matters, according to renewable power insiders familiar with the document. This clearly needs to change.

The UK-Norway interconnector is a step in the right direction, an indication that policymakers are beginning to think across national frontiers. And at European Union level, at least, there is a growing awareness of the need to develop energy corridors between nations. When it comes to getting things done, however, projects still tend to get mired in discussions about who is responsible and who pays. In the meantime, though, offshore wind farms are being built, solar panels are going up on roofs, nuclear and coal-fired plants are being shut down. The hub-and-spoke distribution system is being wrenched apart.

Is anyone thinking about what should replace it? Yes: the Friends of the Supergrid, for one. And the Friends, headed by Eddie O’Conner, have a plan.

“Europe is building an ‘electric economy’,” says the group. “Electricity is set to become the dominant source of energy. It will drive the transition to a low-carbon, high-growth future. By 2050 most of our transport could be powered by electricity.

“As part of this transition, electricity grids will no longer be seen as a national resource. They will become international corridors of trade bringing renewable energy generation to European centers of population.” 

There is no doubt that the Friends have a great vision. And some powerful members, too. Indeed, they have already secured the backing of Dong Energy, National Grid, Red Eléctrica de España, Vattenfall and, of course, Mainstream Renewable Power.

Their talk is of a super grid stretching across Europe by 2050. But that grid needs to be taking shape now, not tomorrow. The super grid needs more friends, more action, more quickly. 

Adam Barber is the publisher of A Word About Wind.

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