The new e-paper ‘European energy infrastructure for 100% renewables’ by Fabian Praeger, Claudia Kemfert and Christian von Hirschhausen recommends to plan our energy networks now for a future without fossil fuels and nuclear power. The authors compare the specific challenges of networks for transporting electricity, gas, hydrogen and captured carbon. They argue for a more coherent, integrated planning to balance centralised and decentralised elements of European energy infrastructure. In an additional analysis, Simon Skillings shows how such an integrated planning in the North Sea can cut costs and advance the European energy infrastructure policies in general.

The North Sea as Europe’s powerhouse and motor of integration

Closer cooperation on energy networks in the North Sea could deepen the integration amongst the EU and its neighbours. EU Member States and Norway have set a target of installing at least 300 gigawatt (GW) of offshore wind turbines by 2050. In addition, the UK has scenarios of adding up to 140 GW in its waters by 2050. Besides offshore wind turbines, there are the emergent ocean energy technologies such as underwater turbines driven by tidal and wave energy. The EU has set a target of 40 GW by 2050 for ocean energy. With up to 500 GW of electricity generation capacity, the North Sea alone would then be the home to a higher capacity than the sum of all nuclear power plants worldwide.

Offshore energy potentials are gigantic – but fish don’t need electricity

The offshore wind technology is now a mature industry with robust growth plans. New floating offshore technologies increase the wind energy potential for sea basin areas beyond shallow waters. Thanks to higher efficiencies and economies of scale, it will further reduce its cost of electricity generation by roughly 50% until 2050. Its infrastructure challenges however are far from being solved.

‘Fish don’t need electricity,’ as a critical voice coined it when the wind industry prepared to get wet feet. Installing wind farms in deep seabed, hundreds of kilometres away from the shoreline indeed raises the question of how to get the huge renewable energy potential to the consumers. The following three big energy infrastructure challenges are obvious for offshore energy. Tackling these challenges in the North Sea could bring about the integrated infrastructure planning that is required anyway within the EU and between EU and its neighbours.

Growing energy infrastructure challenges with an accelerated energy transition

First, there is the time dimension: Project developers and grid operators need to anticipate the future energy system needs and localise them early enough because the planning and construction of costly new energy networks such as undersea cables can take decades – and this infrastructure will have to stay in use and in place during decades afterwards. Like onshore, the offshore grid expansion struggles with keeping pace with the growth of renewable generation capacities. The EU and its neighbours currently have no harmonised process for prioritising and speeding up the urgently needed update of energy infrastructure.

Second, there is the planning dimension: By now, national grid operators connected offshore wind farms situated in national waters in an isolated way only to their national grids. This leads to more kilometres of cables that need to be put under the sea compared to a meshed offshore grid where several offshore wind farms are connected amongst each other and thus can feed their electricity into more than one single national onshore grid.

Integrated planning is not only required across national remits. Europe’s renewable energy system needs an integrated assessment of electricity, gas and hydrogen networks. The steel and chemical industry clusters in the northwest of Europe eye the North Sea offshore wind as electricity supply for electrolysers that produce hydrogen. Bringing all the offshore wind power to them through new cables would require a multiplication of cable capacities. Instead, electrolysers could also produce some of the hydrogen offshore. Independent modelling shows that it is more efficient to send the hydrogen directly to the industrial demand centres through refurbished fossil gas pipelines. Neighbouring countries together would need to commit to both new cross-border corridors for different energy carriers and to decommissioning of fossil gas pipelines.

Third, there is the financial dimension: Connecting offshore wind farms with undersea cables is very expensive. The EU tightly regulates grid expansion. Investments normally are refinanced through the national network tariffs charged on every kilowatt-hour consumed by all the grid users in a national grid. This refinancing scheme might be too inert for the multiplication of cross-national investments required on the short term for hundreds of gigawatts from the North Sea. In the worst scenario, cheap abundant offshore wind power fails to reach consumers onshore because of missing grid capacities. Again, a meshed offshore grid can reduce the costs for grid expansion. Modelling by Imperial College consultants expects up to €50bn of savings by 2050. A meshed grid also makes affordable offshore wind power accessible to more than a single national electricity market. Imperial College consultants estimate an additional €25bn of savings from such improved electricity trading, potentially lowering more consumers’ electricity bills.

From energy nationalism…

The decision about which energy infrastructure will connect offshore wind farms with which country is far from being just a technical challenge for engineers. With its Clean Industrial Deal, the new European Commission plans to make its industries more competitive in the global run for the key technologies of the energy transition. Access to cheap renewable power through well-connected grids is a prerequisite. But planning pipes and pylons recently has fuelled tensions amongst EU Member States:

• The Swedish government in June 2024 rejected an application for building a subsea electricity interconnector to Germany, preferring to limit its electricity trading with neighbouring Scandinavian countries that have on average a lower price level.
• France has a long history of hindering cross-border electricity imports from the Iberian peninsula, shielding the nuclear capacities of its EDF group against competition from cheap Spanish solar and wind power. French, Spanish and German governments in 2022 clashed about the H2Med hydrogen pipeline project for Iberian hydrogen exports to central Europe.

Nevertheless, there are also signs that speak for a deeper integration, at least when it comes to the North Sea.

…towards a European Infrastructure Union?

Many national governments already experience congestion of their national electricity grids. More importantly, the Russian weaponization of fossil gas has highlighted the benefits of well-connected European energy networks for security of supply. Against the backdrop of next year’s proposal for the EU’s Multiannual Financial Framework, political parties along with academia and industry have called for increased funding. The Recovery and Resilience Facility already backed national plans for investments worth €13bn into energy networks. The existing EU-wide energy infrastructure pot, the Connecting Europe Facility, could be strengthened. New important financial tools for EU infrastructure such as a dedicated ‘EU Grids Fund’ will only be effective if Member States, EU institutions, regulators and grid operators can also agree on upgrading the institutional setting appropriately. The Draghi report suggests a dedicated supranational regime for grid interconnectors.

With the North Seas Energy Cooperation (NSEC), national governments have already developed an intergovernmental platform for closer coordination of their national network plans. The NSEC integrates the non-EU country Norway. It could open its doors for formal cooperation with the UK again. This is indispensable for any consistent offshore energy strategy. Based on the 2022 revision of the Trans-European Networks for Energy (TEN-E) Regulation, the EU umbrella organisation of transmission system operators for electricity (ENTSO-E) already started to develop dedicated offshore network development plans. The European Commission’s Grid Action Plan of November 2023 made the common identification of offshore grid needs a priority. The Commission also issued guidance on cross-border cost sharing of offshore energy projects. By tackling these concrete topics, the new EU and UK leadership could materialise mutual benefits in view of the ‘reset’ of their relations.

The authors of both new papers recommend two elements for upgrading energy infrastructure governance:

1. To avoid over-investing and stranded assets, infrastructure planning should follow the objective of a deeply decarbonised, renewable energy system. Scenarios that build on a continued use of fossil fuels and a prominent role for nuclear power can undermine a fast and cost-efficient update of European energy infrastructure.
2. To identify the future energy infrastructure needs, an independent overview across existing silos is key. Currently, EU operators for gas and electricity grids are for-profit entities that earn rents on the infrastructure they own and operate. They tend to have an inherent interest in just building additional subsidised infrastructure. Optimising the interaction of electricity, gas and hydrogen networks across borders and sea basins however requires a dedicated governance. An Independent System Operator as just established in the UK could help identifying priorities for integrated grid and market management.

The North Sea then could become the training ground for truly integrated energy networks. The EU and its neighbours can exercise the grid governance needed in the rest of European regions anyway to make them fit for an energy system dominated by solar and wind power.

This article was first published on eu.boell.org/en.