Let’s open
the path to progress
towards a greener Europe

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Breaking down the barriers to renewable energy in Europe


Europe is at a critical point in its green transformation journey. The EU has clear and ambitious renewable energy targets, but meeting them requires bold and decisive action to open the path to progress.


Our Ørsted paper identifies the barriers to progress for Europe’s green transition, and how we can take them down together. These barriers are technical, procedural, and administrative – and they were put there by humans. So, while it’s not an easy task to break them down, it is within our power, if we work together.  

 

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Five ways to open the path to progress

1. More flexibility in tender design

At present, most tenders rigidly specify the capacity, location, timing, and connection points of European offshore wind projects. This means that build-out targets are often constrained by lack of flexibility in tender design.

Greater flexibility for developers would make the build-out faster, cheaper, and more fit-for-purpose. 

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    If developers were given greater flexibility to decide on what capacity is installed at a specific site, they’d be able to find new ways to create value. For example, they could decide to ‘overplant’ the site, installing a production capacity that exceeds the grid connection capacity, allowing for better grid utilisation. They could also co-locate electricity use, serving industry or e-fuel production on or near to the site. 

    Greater flexibility in the delivery timeline would allow winning developers to be more strategic in how they plan site surveying and sourcing of vessels and components, ultimately lowering costs. 

    In sum, greater flexibility allows market players to optimise the overall value of a project, rather than having to focus on a narrowly defined price.


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2. Invest in the future of Europe’s energy grid 

Today’s infrastructure buildout responds to short-term locked-in needs, but long lead times means it can’t keep up.

Anticipatory investments are key to helping avoid and overcome bottlenecks in Europe’s renewable energy build-out. 

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    To decarbonise the European energy system and meet future demand for electrification and e-fuels, we need 2.5 times the electricity we use today. 

    This calls for an immense expansion of the European transmission grid – and for the establishment of a European hydrogen backbone. This is vital both for getting power from producer to consumer, and for better integrating, trading, and managing variability, as well as sharing back-up and flexibility resources across borders and regions. 

    But we need to get started today. Grid planning and build-out are cumbersome and time-consuming. We propose that regulatory approval for infrastructure projects embraces anticipatory grid investment – even when this comes at a risk. This risk and potential cost to the ratepayer are far outweighed by the benefits brought by a strong, green, competitive power system. 


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3. Enable the industry to deliver in the face of uncertainty 

Market uncertainty and cost inflation are hindering investment in the offshore wind supply chain.

Our industry’s ability to deliver can be strengthened by creating an enabling environment that de-risks supply chain investments. 

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    The wind industry is facing inflation, the rising cost of materials, energy, labour, and capital, and growing global competition. Meanwhile, the European policy response to the energy crisis has added new regulatory uncertainties. At this moment where offshore wind needs to scale up, profitability is falling, and investments fail to materialise. 

    Greater certainty would be provided by a firm and visible pipeline of projects, and by unlocking market volumes, for instance through large-scale tenders. This de-risked environment would enable offshore wind developers to place orders, make supply chain investments, and deliver the renewable energy projects Europe needs. 


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4. Co-locate renewable power generation and Power-to-X

Incentivising co-location and facilitating offtake of renewable hydrogen and e-fuels will speed up the decarbonisation of hard-to-electrify sectors while supporting the grid and energy system. 
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    Europe needs renewable hydrogen and e-fuels to decarbonise its economy. To meet EU targets by 2030, electricity demand for renewable hydrogen electrolysis will equate Germany’s entire electricity usage today. 

    If renewable hydrogen production is located close to the sources of renewable power – for instance, near windy coastlines – then large scale electrolysers can act as an important source of flexibility and resilience in the grid, and potentially limit the need for such extensive investments in electricity transmission. 


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5. Put value on more than just price 

Price is often the only factor considered when awarding renewable energy projects.

A societal value approach with non-price criteria incentivises our industry to deliver benefits for climate, nature and society. 

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    It’s possible for offshore wind to deliver real value to nature and society – such as having a net-positive impact on biodiversity. Developers could be encouraged to design projects that embed specific integration solutions. These non-price factors could be made into qualifiers for being allowed to build, or they could become part of the evaluation criteria in competitive state tenders.


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