Europe’s vast ocean resources have enormous potential to the energy needs of the continent. As land is becoming increasingly difficult to acquire, counties are now turning to offshore wind to meet their climate goals. In November, 2020 The European Commission recommended an expansion of the European Union’s offshore wind capacity so as to achieve climate neutrality by 2050. This would involve the development of 300 GW of offshore wind and an investment of €800 billion over the next 40 years. So far, a large part of the offshore wind capacities have been built in the North Sea region. The report titled ‘How Black Sea offshore Wind Power Can Deliver a Green Deal for this EU Region’, analyses the offshore wind potential of the Black Sea. Further, it goes on to state that meeting the European Commission’s target will require a dedicated governance framework. REGlobal presents an extract from the report……
To date, the 22 GW offshore installed wind capacity is divided among ten member states, mostly in the North Sea region. Reaching the 2050 EU ‘offshore wind ambition’, however, will require a focus beyond the North Sea. Of particular importance is the Black Sea offshore wind’s potential to provide an alternative for baseload as coal, which will gradually need to be replaced and which is widely present in power. generation in the region. In addition to this energy policy benefit, offshore wind offers an opportunity to stimulate the region’s economic development, possibly in the context of the EU’s drive for developing a hydrogen economy.
Offshore wind potential in the Black Sea
The Long-Term Strategy (‘A Clean Planet for All’), which has informed the European Green Deal, expects offshore wind power generation capacity to reach between 222 GW and 451 GW by 2050. WindEurope (2019) estimates are even higher, with 450 GW of offshore wind by 2050, of which about half would be installed in the North Sea alone. The rest is allocated in roughly equal shares in the Atlantic Ocean (85 GW), the Baltic Sea (83 GW), and southern European waters (70 GW). Surprisingly, the Black Sea remains absent in this WindEurope projection.
With maturing commercial scale by 2030, costs of floating wind farms’ installation could also decrease to €40–60 per MWh for the first commercial-scale projects with final investment decision between 2023 and 2025, according to WindEurope’s (2018) estimations. In addition, some studies already expect green hydrogen production from offshore wind to become profitable by 2030.
The relative lack of interest from the EU side strongly contrasts with a recent World Bank map, which estimates the Black Sea region’s technical potential at 435 GW, of which 269 GW is fixed and 166 GW floating, although not all of this potential is located in the EU or Energy Community member states. This is significant, even if it is only a fraction of the North Sea region. While there are no current projects under development, the region is showing an incipient appetite for offshore wind. One of the first projects, Hidroelectrica in Romania, aims to invest 600 MW of wind power by 2026, of which 300 MW is designated for offshore wind.
The relative lack of interest from the EU side strongly contrasts with a recent World Bank map, which estimates the Black Sea region’s technical potential at 435 GW, of which 269 GW is fixed and 166 GW floating, although not all of this potential is located in the EU or Energy Community member states.
Among the contracting parties of the Energy Community, it is Ukraine that has by far the highest potential, with more than 250 GW. If realised, offshore wind would easily outstrip the value of its reserves in coal, a commodity that rapidly loses market share. Although there are no offshore installations in the country currently, the fast-growing onshore wind sector, which reached 620 MW in 2019 – a more than sixfold increase since 2010 – could give the impetus to developing offshore wind as a complement and as a step to beginning the transition to a low-carbon economy. However, most suitable territories are located in the Sea of Azov and around the Crimea, which could make the situation sensitive to the region’s geopolitical tensions.
Alternatively, the offshore wind development of the Black Sea could revive the old discussion for a high-voltage direct current (HVDC) link between Romania and Turkey (as well as the Georgian–Romanian interconnector) as well as a Black Sea HVDC infrastructure primarily serving the expanding renewable energy sector. Although offshore wind has not been present in the market in Russia so far, opportunities for its development are being discussed
While not located on the shores of the Black Sea, Azerbaijanis usually considered as part of the Black Sea region and included in regional cooperation frameworks. With an estimated 157 GW of technical potential, the country has expressed increasing interest in developing offshore wind parks in the Caspian Sea. Currently, the country is preparing the Roadmap for Offshore Wind, jointly with the International Finance Corporation of the World Bank Group, to identify the relevant territories.
With a technical potential of 845 GW, the Caspian Region’s potential is nearly double that of the Black Sea. Almost half of that potential (418 GW) belongs to Kazakhstan, with its northern maritime territories entirely suitable for fixed wind. Turkmenistan has an offshore wind potential (73 GW) with some floating options located in its northern maritime zone (27 GW). With this potential for offshore wind in the Caspian Sea, the best sites for offshore wind are considered to be in its northern parts.
Offshore wind requires different skills than the coal industry, for example, creating incentives for the development of engineering schools and training, including for those who are directly employed by the industry. It will almost inevitably trigger the development of suitable offshore education facilities and training programmes alongside reskilling as far as necessary, perhaps with opportunities to become ‘expertise exporters’ to the rest of the Black Sea basin or even the Caspian Sea. In the case of the Black Sea region, offshore wind, with its high load factor combined with decreasing costs, could become a long-term solution for replacing carbon-intensive coal and lignite power plants. Offshore wind provides stable power generation, which can serve as a baseload power generation. In 2019, an average offshore wind capacity factor reached 38 per cent, with a potential to perform at almost 50 per cent, compared with 24 per cent for onshore wind and around 20–25 per cent for solar.
Black Sea offshore wind potential could catalyse not only the development of large-scale renewable energy generation but also investment in the complex supply chain that such development will require. Among other benefits, installation and commissioning of offshore wind farms could revive the shipping industry and the harbour activities required for the installation and functioning of offshore wind farms. In addition to direct job creation, there are opportunities to attract investment from turbine manufactures locating their manufacturing plants within the region, particularly in rural parts and coal regions.
Following the adoption of the EU hydrogen strategy in July 2020, each member state will have to introduce power capacities to produce carbon-free hydrogen. The Black Sea, as a region with relatively well-developed electricity grids, will have particular opportunities for this. Hydrogen can also be used in decarbonising district heating, which prospectively plays an important role in the regional energy demand; the share of central district heating in residential energy consumption constitutes 23 per cent in Romania and 16 per cent in Bulgaria. Arguably, only large-scale hydrogen production optimised with offshore wind electricity generation is able to satisfy those needs.
Following the adoption of the EU hydrogen strategy in July 2020, each member state will have to introduce power capacities to produce carbon-free hydrogen. The Black Sea, as a region with relatively well-developed electricity grids, will have particular opportunities for this.
Apart from decarbonisation benefits from substituting coal and gas in power generation, offshore wind could notably increase security of supply in the Black Sea region. It can address the frequent electricity shortages that have become exemplary over the past years, including the infamous cold spell in late December 2016 and early 2017. In light of the political motivation for offshore wind seen in the region, an offshore wind strategy for the Black Sea could also counter both gas import dependence and increasing inward investment in ‘grey’ energy in the region, as well as create an upturn for the cross-border electricity trade in the wider region – with a high potential for green electricity export.
Black Sea offshore wind – governance challenge
Large-scale deployment of offshore wind will require regional cooperation; grid planning and investment is but one example, traditionally a challenge in the region. It will also require co-ordination and cooperation in marine resource management, i.e. the allocation of seabed tenure and the granting of development rights.
Scaling up of offshore wind requires the use of large maritime territories and, by extension coordinated access to the seas with other users. Coordinated spatial planning within the entire sea basin – not within the national borders – is crucial for offshore grid development. It ensures efficient use of the limited maritime space and the protection of the environment and biodiversity. Detailed national and regional assessments of the offshore wind potential are likely to be needed, including public consultations. It may also require the development of a common Maritime Spatial Planning strategy for cross-border areas including a mechanism for the Black Sea basin cross-border cooperation.
Significant investments in network capacity are required up to 2050 to accommodate both the shift to low-carbon sources of generation and increases in demand, driven by electrification, for example of heating and transport. While there is a significant variation in the market, regulatory, planning and licencing regimes applicable to offshore wind across the EU, joint (hybrid) projects may benefit from a dedicated regulatory framework.
Offshore wind power affects internal grid costs by affecting internal power flows and congestion patterns – offshore wind power is likely to increase congestion close to the connection points. This highlights the importance of considering offshore wind power and network investment planning together.
The importance of offshore wind can also be grasped in the context of the ongoing revision of the TEN-E Regulation. The EU’s greater ambitions under the European Green Deal will require more ambitious grid solutions. This could include solutions to hybrid offshore projects but also complementary hydrogen networks. There may also be synergies with trans-European transport networks by, among other things, multiplying and reviving harbour and port activities.
Offshore wind cooperation as a part of the external dimension of the Green Deal
Considering the experience of the North Seas Energy Cooperation and the Baltic Sea, a bottom-up initiative in the Black Sea region, aligned if not built on existing governance structures, could be envisaged. The framework would need to be adjustable in light of technological progress and possibly not exclusively EU-based, considering other interested actors, especially from the Energy Community, as is the case with the Central and South Eastern Europe energy connectivity initiative (CESEC), for example. This helps to avoid the ‘ins’ and ‘outs’ of the EU regulatory space, at least between EU and Energy Community countries. CESEC, therefore, is an obvious docking station. One of the advantages of CESEC is that it already encompasses EU member states and contracting parties of the Energy Community while offering a ready-to-go working platform for issue-specific engagement. This platform could be expanded to offshore wind, maritime renewable energy in general, and other relevant maritime issues. The current CESEC framework, however, does not foresee a significant role for non-EU/Energy Community parties. A starting point could be the creation of a dedicated Offshore Wind Group as a sub-group under CESEC.
Taking into consideration the experience of North Seas Energy Cooperation, as well as CESEC itself, a regional dialogue could begin with informal consultations among governments and stakeholders such as civil society and investors, regarding opportunities for offshore wind and its benefits for the region. CESEC has also proved that the involvement of investors facilitates projects. It is feasible that such a group might be led by the Bulgarian and Romanian governments, possibly in cooperation with the European Commission. Potentially, given the importance of offshore renewable energy, and depending on the stakeholders’ appetite for tidal and wave energy and floating solar PV, the group could be enlarged to include other maritime energy sources, if appropriate, for example in a ‘maritime renewable energy group’.
If it stays within the existing CESEC framework, focus could be on identifying key issues and strategies for offshore wind and could be broken down to the following levels: (i) High-level group to focus on steering of priorities and strategies (ii) Technical support groups with workstreams to discuss more specific issues:
a) Technical workstream could address regional peculiarities of offshore wind development, such as maritime spatial planning, accessibility and quality of geospatial data, and regional grid planning in cooperation with transmission system operators (TSOs) and European network of transmission system operators (ENTSO-E). The tasks can also exceed the EU regulatory space attracting non-EU countries of the region interested in offshore wind technologies.
b) Projects & investments workstream could engage in spotting regional business opportunities and stakeholders’ interests in offshore wind projects. Considering the importance of various EU funding , private investment would remain the key to driving offshore wind deployment in the region.
c) The Regulatory workstream could focus on identifying administrative and regulatory barriers to offshore wind projects at EU and regional levels.
The initial objectives of any governance framework will be mainly to enable the development and scaling up of offshore wind in the EU and, if applicable, Energy Community member states. However, engaging with other non-EU countries of the region, i.e. Azerbaijan, Russia, and Turkey, may be crucial for achieving ‘the climate-neutral’ continent envisaged by the European Green Deal. As the European Green Deal document indicates, without at least a gradual raising of climate ambition of non-EU states, EU efforts alone will be unable to decrease greenhouse gas (GHG) emissions in the Wider Europe. Any Black Sea governance will need to work first and foremost towards achieving internal EU and Energy Community objectives. At the same time, however, in light of the offshore potential both in the Black Sea and the Caspian region, it would be beneficial to add tools to facilitate engagement with non-EU countries. As EU member states, both Romania and Bulgaria, supported by the EU, are well placed for a leadership role.
Increasingly, there is evidence of offshore wind potential beyond the North Sea, for example, the Baltic Sea, southern European waters and notably the Black Sea basin. Recent analysis shows that Bulgaria and Romania alone have a technical potential for more than 100 GW capacity, or the projected total EU capacity by 2030; Ukraine’s potential is two and a half times that. More potential exists in all other Black Sea basin countries. Thanks to technological innovation, economies of scale, and maturing of supply chains, costs – notably for fixed offshore wind – are steadily falling. Offshore wind with load factors of up to 50 per cent or more offers stable power generation. It can also play a major role in substituting increasingly uneconomic coal. This allows the weaknesses of power systems to be addressed, which is a recurrent theme in the Black Sea region, both for EU and non-EU countries alike. With adequate development of the transmission grid, landlocked countries such as Hungary, Serbia, Moldova, and Northern Macedonia could equally benefit.
In addition to providing low-carbon electricity to feed growing electrification, the high load factor also makes offshore wind a suitable energy source to produce green hydrogen. Low carbon electricity and hydrogen will increasingly become a precondition for attracting investment for manufacturing and services, especially but not only for the low-carbon value chain. Over time this will offer opportunities for jobs and growth, including in South East Europe. The development of low-carbon technologies will be able to create jobs along a wide segment of the value chains, covering for example R&D and manufacturing but also installation, maintenance, and operation. Once the industry settles in the region, it will require IT and other services as well as training and skilling.
While in the North Sea, a framework is being built from scratch, in the Black Sea, with CESEC, a governance framework for EU and Energy Community member states already exists. The most promising seems to incorporate a special ‘offshore wind’ framework into the CESEC process. The EU might want to consider establishing concrete benchmarks, for example through links to the NECPs, especially in light of the soon-to-be-revised targets for GHG and renewable energy in 2021.
Against this background, a number of steps should be taken.
- The forthcoming offshore wind communication should fully acknowledge the opportunity that offshore wind offers for the region.
- The review of the TEN-E Regulation should lay the groundwork for grid extensions, for electricity, for hydrogen, and also transport for harbour regions.
- To accelerate developments on the ground, the European Commission might consider establishing concrete benchmarks for offshore wind – possibly in conjunction with other renewable energy – in the NECPs that are up for review in light of the soon-to-be-revised targets for GHG and renewable energy in 2021.
- The EU and CESEC should consider how integration of offshore wind can be incorporated into CESEC governance, to make full use of the already existing governance framework.
- Coordination in Maritime Spatial Planning could be intensified, for example between Bulgaria and Romania, to develop the Maritime Spatial Planning common strategy, with a focus on identifying the territories available for offshore wind deployment.
- National offshore strategies should be urgently developed, with a view to identifying plans and projects to be submitted under the Next Generation EU recovery plan.
- Existing and potential opportunities for hybrid projects in the border maritime zones of Bulgaria and Romania should be explored.
This article has been sourced from CEPS