A European Green Deal

Enabling the industry to scale

Increasing the installed offshore wind generation capacity by a factor of 20 by 2050 – which is required to drive the electrification of hard-to-abate sectors and to continue the replacement of fossil fuels in Europe’s power supply – is possible.

The European offshore wind industry currently installs approximately about 4GW per year. Towards 2030, with current buildout plans, the European supply chain capacity will have to double this to about 8GW per year.

However, to stay on the right trajectory towards 2050, an even faster buildout rate is needed. From 2030 onwards, 20 GW or more will have to be installed each year.

Therefore, for the offshore wind industry to fully deliver on its own part of a Green Deal for Europe, the following questions will require answering:

• What will it take to invest sufficiently in the industrial supply chain?
• How do we ensure that offshore wind energy supply can grow in parallel with increasing demand due to electrification?
• What should the governance look like?

What will it take to scale up the industrial supply chain?

For the offshore wind industry to continue its growth and deliver a quarter of Europe’s power by 2050, significant investment into the industrial supply chain is required.

Until now, the European offshore wind supply chain has been able to scale consistently, with a compounded annual growth rate in annual additional capacity of 26% in the period 2000-2019. To deliver 20GW per year from 2030 onwards, a growth rate of about 17% each year for the next decade is necessary.

However, as technology develops and offshore turbines grow larger, the number of blades, towers and foundations needed per GW will decrease, easing the ramp-up somewhat. It will be an impressive feat. But given timely and adequate investment, there will be few – if any – material bottlenecks during this expansion.

Such an industrial ramp-up has the potential to of revitalise coastal communities and stimulate industrial economic growth in regions throughout North west Europe, providing societies with tens of thousands of jobs for skilled workers.

Short term
High-level goals unlock investments in the supply chain
To maintain installation rates at the right trajectory towards 2030 and beyond, a significant proportion of this investment is needed at the earliest onset.

European governments and policymakers should seek to formulate ambitious political buildout commitments, as this is key to ensuring the necessary investments in the offshore wind supply chain.

Long term
Fast-track multilinked projects
To kick-start the industrial learning with more complex, multilinked projects, European governments, together with relevant EU institutions, can work to fast-track a series of multilinked tenders towards 2030. In addition to being an efficient way of integrating markets and installing offshore wind generation, this would provide the industry with valuable practical regulatory experience with cross-national infrastructure as a step to more advanced, ‘meshed’ solutions in the future.

How do we make sure the energy demand is shifted towards green electricity and other renewable fuels?

While ramping up renewable energy generation is crucial, supplying the transmission infrastructure and shifting the demand to green power is equally important.

Shifting demand comes with a considerable lead-time. It could take up to a decade before either a push for electrification of transport or a conversion to electrofuels from power-to-X technologies significantly affect power demand.

To succeed in the green transformation, Europe should already today begin to promote electrification within transport, heating and industry, as well as power-to-X technologies, e.g. by promoting consumption of renewable hydrogen.

Short term
Grow the market for renewable hydrogen
In the short term, focus should be on creating and sustaining a market for renewable hydrogen and other power-to-X technologies, to incentivise private investment in the development of commercial scale plants. This could be done in dialogue with key offtaking industries as well as through research and development projects.

Many potential offtakers of renewable hydrogen are exposed to global competition. The decarbonisation of these sectors will therefore have to be carefully designed to drive the transformation without pushing the economic activity out of Europe.

Long term
Lock in electrification and power-to-X growth trajectories in line with 2050 targets
Towards 2030, policymakers and all industrial sectors should continue the ongoing dialogue on how best to ensure direct and indirect electrification to ensure development and deployment of new technologies at scale, thereby bringing down costs. It is also important to establish an electrification trajectory to underpin the long-term goal of decarbonising Europe.

What should the governance look like?

Offshore wind energy has until now mainly been handled within the realm of national energy and climate policy, on a project specific basis.

Energy policies have called for a specific buildout volume, with energy authorities defining how and where to integrate the generation into the electricity grid. Other political branches – business, defence, environment and maritime – mainly come into play when reacting to offshore wind energy plans.

This project-specific, national approach has been suitable so far. It has allowed the industry to scale and costs to be brought down. However, as shown in this paper, the current approach limits synergies and results in a sub-optimal buildout of offshore wind.

Short term
High-level buildout commitments and cooperation
European governments can help by acknowledging decarbonisation – and by implication offshore wind energy – as a necessity, for which all relevant agencies should plan.

Such high-level commitment to offshore wind energy buildout facilitates dialogue between all relevant branches of government and helps aligning procedures to policy objectives. This can create an incentive to identify and remove regulatory barriers, which could ease permitting of both offshore wind projects and transmission infrastructure, help pragmatically identify and prioritise sea uses and help seek and develop solutions for co-existence.

Between governments, bi- and multilateral dialogue could also be strengthened. Offshore wind resources do not adhere to national borders, and the countries with the larger resource potential are not necessarily the ones with the largest consumption.

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Long term
Establish principles of a multigovernmental approach to the buildout
Working together and across borders will be crucial in the long run, in order to enable the cost-efficient utilisation of Europe’s vast offshore wind resources. Eventually, a common regulation for the European seas could be tabled to facilitate this cooperation even further.

Beyond 2030, the offshore wind energy buildout will to an increasing extent span across borders. European governments and the EU can already start to consider how multigovernmental principles might be formulated, to allow the optimal utilisation of offshore wind resources that are situated across borders relative to demand. In practice, this involves considering: how to ensure that the best sites for offshore wind energy are always used first, regardless of their jurisdiction.