OWE 2017: 'Collaboration is key' in the North Sea -- Updated

UK: Marie-Christine Marghem, Belgium's minister of energy, environment and sustainable development, warned that subsidies must "drastically fall" following other auction results.

Marie-Christine Marghem, Belgium's minister of energy, environment and sustainable development
Marie-Christine Marghem, Belgium's minister of energy, environment and sustainable development

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Speaking at the opening session of the WindEurope and RenewableUK trade show in London (6-8 June), Marghem said the subsidies for offshore wind must fall quickly following the success at recent auctions. 

"I commissioned the Belgium regulator to make a comparision of prices with our neighbouring countries. The conclusion is clear: Subsidies... must drastically decrease.

"The extremely low prices observed in the Netherlands and Germany prove that the technologies are evolving and this should drive down prices.

"Collaboration is key, creating hubs and bringing the connections together is what should be the principle driver towards cooperation in the North Sea. 

"Only a pragmatic, step-by-step, bottom-up approach will help us progress," Marghem said.

Rainer Baake, state secretary for energy at the German economy and energy ministry, admitted that the subsidy-free projects in the German auction had "taken [him] by surprise". It was "an incredible development" that showed investors had trust in the market design, he added.

Kristoffer Böttzauw, Denmark's deputy permanent secretary at the energy ministry, responsible for utilities and climate, identified the next step to further lower offshore costs. "The cost of grid connection is a key issue. I think this is the next big question that we need to address with an open mind, creativity, ambition and determination. We cannot afford to not make this a success," he said.

Noting the North Sea's "enormous potential", he compared it to Silicon Valley in terms of developing new technologies. "There is no question that offshore wind will be an important part of our future", Böttzauw added.

Growing appetite

Also at the opening session, WindEurope CEO Giles Dickson said the recovering European economy increases the "appetite for clean, competitive and reliable energy".

"Offshore wind is uniquely well placed to meet that challenge. Offshore wind has cut costs dramatically — by 50% in the last two years alone. That is nothing short of extraordinary.

"We expect the current [contract for difference] auction round in the UK to confirm this trend.

"With the right policies and planning in place, this remarkable cost reduction could translate into siginificant additional volumes of offshore wind energy for Europe by 2030," Dickson added.

He also highlighted a new report, Unleasing Europe's offshore wind potential, published by WindEurope in partnership with BVG Associates.

Among the report's key findings, it stated that offshore wind could provide up to 25% of Europe's energy demand by 2030 at an average cost of €54/MWh "in the most favourable locations". This prices includes the cost of grid connection and system integration. 

RenewableUK's executive director, Emma Pinchbeck, said: "This report shows what our innovative offshore wind industry can deliver in the years ahead, securing economic growth and cheaper electricity.

"The [UK] government can help us by continuing to hold fiercely competitive auctions for financial support, as well as putting offshore wind at the heart of its upcoming industrial strategy. Clear, bold, modern energy policy will attract billions of pounds of investment".

Coordinated tenders

During the panel discussion follwing the opening session, Samuel Leupold, Dong Energy's CEO for offshore wind power, said that a "coordination of tenders would be very significant" and would help suppliers and contractors. It would be "a massive step forward" for the industry, he said, calling for an end to "stop-go" policy.

Jens Tommerup, CEO of MHI Vestas Offshore Wind agreed, calling for "visibility and volume in the pipeline". Annual capacity additions of 4-8GW is the sort of scale the industry requires, he said.

Already, "offshore wind is delivering more growth, more innovation, more jobs and more infrastructure than any other sector," said Keith Anderson, CEO of Scottish Power Renewables. He asked policymakers and governments to "open your market to offshore wind and we will deliver".

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