Opportunities for the Development of the North Sea Energy Basin What role for coordination? What can Oxford do to help? Oxford, October 5th, 2015 Brendan DEVLIN European Commission DG Energy
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Substantial amount of low-carbon, indigenous resources close to energy intensive regions
Source: Stanford University, European Commission
Wind Potential Gas Resources Marine Energy
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Not comparable at all…….
DE Day Ahead Baseload Trade
date . 37.1
UK Power Exchange Spot
Price . 54.7
[EUR/MWh] Source EMOS 1/10/2015
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• Facilitate Trading between countries around the North Sea
• Projects of Common Interest (permitting, regulatory measures, finance)
• Study on Cost Benefit Analysis of meshed grid
• Cross Border Cost Allocation
• Promote stability of the regulatory regime (reduce the revenue risk)
• Increase value of existing assets by giving value to traded electricity
Development of interconnectors
Thermal Power Optimisation: Natural
Gas
Optimal grid design- resolution of onshore
bottlenecks
Removal of development barriers
Regional Balancing / Price Reduction
Role of the European Commission (third-party proposals)
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EC's Role in the North Sea Energy System
• Facilitate exchange between technology developers • Coordinate standardisation • Financial support (FP7, Europe 2020)
• Alignment of the regulatory regimes in the North Sea • Development of a dedicated legal framework • Strategic Environmental Assessment
• Infrastructure/PCI process (financing, permitting and regulatory tools)
• Study on grid design, cost/benefits
• Development of risk mitigation instruments • Promote stability of the regulatory regime (reduced
revenue risk)
Wind Turbine Generator cost compression
Coordinated grid development
Removal of development barriers
Optimization of risk profile
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Meshed Offshore Grid to support RES integration and regional trade at least cost
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Sizing the investment opportunities
120
100
80
60
40
20
100GWe 67GWe 51GWe
Meshed grid investment cost under different offshore wind scenarios, € bln
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PwC-Ecofys-TE
2014 study: there is a sound case for a meshed and coordinated development of the North Sea offshore grid
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• The investment costs are EUR 4.9 to 10.3 billion higher for the coordinated approach (mostly due to offshore substations)
• The annual savings due to reduced CO2 emissions and generation savings are EUR 1.5 to 5.1 billion for the coordinated approach. These monetized benefits make the meshed grid profitable in all scenarios
• Coordination between states for reserve capacity could lead to one-off additional EUR 3.4 to 7.8 billion generation investment cost reductions
• These benefits will not materialize without strong coordination between Member States
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Benefits of a coordinated development outweigh larger upfront investment costs
€4.9 to 10.3 billion investment cost reduction
€1.5 to 5.1billion annual generation savings
€3.4 to 7.8billion generation investment savings
Coordinated approach
Business as usual
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• Framework at state level (Intergovernmental Agreement - IGA)
• Member States to lead, Commission to facilitate
• Strong political support at inception until infrastructure delivery
• Once legal framework, lex specialis requires light political oversight.
• Simple, fit for purpose, clear time-limits
• Ensures revenue irrespective of developments ('floor')
Ideas for framework for the successful development of the North Sea Energy System
Legal Framework
Regulatory Framework
Political Framework
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Political Framework
Local
Regional
National
North Sea
European Union
Industrial
NSCOGI / OSPAR
North Sea Commission
National Cost Reduction Programmes
Research Programmes
Regional Development Programmes
Certification and Regulatory Bodies
Co-ordination