Europe powered by green energy

How the North Seas can lead the change

Table of Contents
  1. Executive summary
  2. The dream has become reality
  3. The North European potential
  4. What will it take to tap the green energy of the North Seas?
  5. The next phase of the green transformation
  6. Get in touch with the authors
  7. About Ørsted

The dream has become reality

 

Since 2007, Europe has pursued its stated ambition to transform itself into a low carbon economy. The EU’s greenhouse gas emissions were to be reduced by 80-95% by 2050, compared to 1990. The Paris Agreement will require even more ambitious targets.


Change is happening. The share of green energy in Europe has increased from 11% in 2007 to 17% in 2016Citation Eurostat, Share of energy from renewable sources in gross final consumption of energy 2004-2016..

This development is driven primarily by changes in the European power sector. In 2016, for instance, 86% of new generation capacity installed in Europe was renewableCitation EEA, Renewable energy in Europe — 2017 update.. Even so, carbon reductions are not happening fast enough in the power sector. In 2016, for instance, almost half of European power production came from fossil assets.

In other sectors such as transport, industry and buildings, respectively making up 34, 18 and 16% of energy related emissions in Europe Citation EURELECTRIC, Decarbonisation pathways European economy. , change is even slower. With the current pace, it will prove difficult to reach the EU’s carbon reduction target for 2050.

However, in recent years, something remarkable has happened in Europe, which has implications for the whole world: new-built green energy became cheaper than newbuilt black energy. For the first time in history, utility scale wind and solar power can outcompete coal and natural gas in power generation across many European countries.

The share of green energy in Europe has increased from 11% in 2007 to 17% in 2016

Wind and solar energy have become less expensive as a result of large scale deployment and as a result of a period of great political push for renewables. Renewable energy targets and economic support from governments have provided the necessary scale and clarity on buildout ambitions. This allowed the green energy industry to take up the challenge, to invest, invent and bring down costs.

This also goes for offshore wind, a technology which until a few years ago was largely unknown or regarded as rather exotic and costly by policy makers and the public.

But the unprecedented recent cost reductions have changed all that. In 2012, the industry promised to drive costs for contracted wind farms below EUR 100 per MWh before 2020. This goal was reached and surpassed well ahead of time – costs of energy actually dropped to EUR 65 per MWh in just six years.

For example, in 2011, Ørsted committed to building West of Duddon Sands wind farm in the UK, with a projected cost of electricity of EUR 177 per MWh. Six years later, in 2017, we committed to building the Hornsea 2 project with an expected cost of energy of only EUR 65 per MWh – equal to a 63% cost reduction.

In Germany (April 2017 and April 2018) and in the Netherlands (March 2018), where transmission costs are excluded from the projects, contracts were granted without subsidies at all.

Offshore wind power is now among technologies that offer cost effective and scalable renewable energy, alongside onshore wind and solar power. This development has enormous potential to change Europe’s energy system, by turning the seas into green power plants. Rapidly falling cost means renewable energy offers a foundation on which Europe’s green economy can be built.

Abundant, domestic and cost efficient renewable energy offers the key to many of the societal ambitions of European countries. A key to maintaining a modern and competitive economy; a key to Europe continuing to take on its global responsibility and combat climate change; a key to a Europe less dependent on imported fossil energy and a key to reducing the negative health and environmental impacts of burning fossil fuels.

Offshore wind power is now among technologies that offer cost effective and scalable renewable energy

Several renewable technologies are already contributing to Europe’s energy system and will play a role going forward. Of these, none today offer both the scalability and cost-efficiency of solar, onshore and offshore wind power to sustain an accelerated transformation and become the backbone of the European energy system.

In 2017, these three alone made up 77% of new European power generation capacity Citation Wind Europe, Wind in Power 2017 .

By 2040, European power production from solar, onshore and offshore wind is expected to grow by 190% compared to today, whereas other renewable sources are projected 35% growth Citation IEA, World Energy Outlook 2017 (NPS). .

Development on the scale required, however, depends on a strong and open transmission grid to integrate and transmit the energy to European consumers.

What made offshore wind energy cheaper than black energy

Several factors have contributed to the reducing costs of offshore wind energy, including:


Industrialisation
Clear and ambitious national plans for buildout allowed for industrialisation in every part of the supply chain. This enables economies of scale, with standardisation and procurement for multiple projects simultaneously, and execution excellence, thus bringing down the cost per unit.


Innovation
Research, development and the drive for improvement has resulted in cheaper, more efficient and durable components, and in new methods of production, main-tenance and means of transportation and installation. And digitalisation, with enhanced sensoring, better modelling and real-time monitoring, has made offshore wind power more easily integrated into the energy system, thus creating more value for the supplied energy.


Scale
Both turbines and farm sizes have grown significantly, yielding more production per turbine and hence producing at a lower cost of energy. For instance, the largest turbine commercially available has grown from 3,6MW (2010) to 8,8MW (2018), and within a few years it will reach 12MW and more. Likewise, the world’s largest offshore wind farm has grown from 300MW (2010) to 630MW (2013) and by 2022 Hornsea 2 will reach 1386MW.

There are, however, important differences between these three types of renewable energy: solar, onshore and offshore wind power.

Solar is abundant, especially in Southern Europe. But the production from Europe’s more than 100GW of photovoltaic panels is focused around peak sunlight hours at noon and in the summer months, whereas energy in Northern Europe is needed most in the evenings and during the dark and cold winter months.

Of all the energy sources, onshore wind power is the cheapest when installed on good and windy sites Citation Danish Energy Agency and BNEF. .  And with more powerful winds blowing in the winter months, both onshore and offshore wind power fits the demand profile of Northern Europe. But with more than 150GW of onshore wind power installed, further buildout is often hindered by space limitations and local opposition to visual impacts and noise emission in typically densely populated Europe.

Offshore wind power, with 16GW installed in Europe today, is not limited by space restrictions. And since the wind blows stronger at sea, a higher amount of energy can be produced per turbine. The so-called capacity factor (measuring the actual output as a share of total output capacity over a period of time) is in some cases twice that of onshore wind power. It also means offshore wind generation feeds electricity into the grid more often, as offshore winds blow more consistently. For example, the total fleet of offshore wind farms in Denmark generates electricity 98% of the time Citation Energinet. .

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This makes a compelling case for an ambitious buildout of offshore wind power. It can provide a domestic, renewable and affordable energy source for an increasing share of European energy consumption.

Furthermore, it would consolidate Europe as the centre for a global industrial complex, with offshore wind energy encompassing a significant proportion of the more than 260,000 Europeans who, according to Wind Europe, are either directly or indirectly employed in the wind energy sectorCitation Deloitte for Wind Europe, Local impact, Global Leadership..

Already today, offshore wind is revitalising coastal areas around the North Seas, that have suffered from years of economic decline. Offshore wind creates local jobs, e.g. in constructing and operating port facilities, building turbine components and foundations and in the construction of wind farms and transmission lines. And as offshore wind farms are built to last 25 years or more, each wind farm is a long term engagement, creating local and regional jobs in operation and maintenance for many years.

Renewable energy technologies

Many technologies will be part of the future energy system. A strong and complementary energy system requires a mix of the available solutions, which, aside from solar, onshore and offshore wind power, includes:


Hydro power is a major component of European green energy supply and will continue to be so, particularly in balancing variable wind and solar power. But the natural potential has largely been exploited and public concerns and regulation to protect biodiversity makes it hard to see hydro contributing with much higher volumes. The existing hydro will instead play an increasingly important role as a balancing resource.


Biomass, sourced on strict sustainability criteria, is now an immediate way to phase out coal on combined heat and power plants especially in colder Northern Europe, and provider of flexibility. In the long run, the power and heating sectors will also be linked by electrification, replacing combustion with electricity in heating, as well as in transport and industry.


Biogas and advanced biofuels from organic waste can be used for power and heat generation or as green fuel in the transport sector. This reduces the need for landfills or waste combustion while making the most of society’s resources. Bioenergy is, and will remain, an important source of energy.

Heat pumps hold great potential for heat generation from renewables, both by extracting renewable heat from natural heat sources, and from using renewable electricity in the operation. They’ll also act as an integrator of the power and heat sector.


Battery power storage is a promising technology, especially for balancing the electricity grid and for shaping the electricity demand, e.g. from minute to minute and between day and night.


Other storage technologies and energy carriers are available as well, such as power-to-hydrogen, enabling long term and grid sized storage and an alternative route to decarbonisation for some sectors, such as in industry. Where economically feasible, these hold great potential for storage, as well as for sector coupling between renewable power sources, such as wind and solar power, and the existing gas infrastructure.


Other technologies are being developed but are still not cost competitive on a European scale. Geothermal energy and grid sized hydrogen fuel cell applications are examples.

  

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The North European potential

 

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