Impacts of offshore grid developments in the North Sea region on market values by 2050: How will offshore wind farms and transmission lines pay?

Increasing the integration of renewable energy in Northern and Central Europe markets is greatly influenced by the development of electricity transmission grid infrastructure. On the background of the fast development of offshore wind energy and its connection to the onshore electricity systems, a coordinated grid development in the North Sea may not only save costs for individual wind farms, but also deliver additional benefits through the provision of increased interconnection of electricity markets. The previous studies do not include offshore wind development with high ambition in the long term perspective and do not focus on the assessment of the specific effects on the economic value of offshore wind farms connected to Belgium, Norway the UK, the Netherlands, and Germany (North Sea Link, Cobra Cable, Viking Link, Nord Link, BritNed and Nemo Link). This paper tries to shed some lights on the substantial differences in the expected economic exposure of wind power plants and transmission lines to the development of the electricity grid in the North Sea. Since details of the prospective energy system around the North Sea region shape these revenue expectations, we further develop and apply the energy model Balmorel. The tool is used to quantify effects of the implementation of a meshed offshore grid compared to a radial grid that connects wind farms in a non-coordinated fashion to the countries by 2050. The model runs conducted for the present paper show substantial variation of expectable market values of wind farms on hub level due to impacts of different options for grid structures. The results aim to inform the discussion on possibilities for the allocation of grid expansion costs to the different connected countries including Belgium, Denmark, Germany, the Netherlands, Norway and Britain.