AWARENESS: How NIORD strategically divides its focus globally - Part One
By Simon Markussen - Senior Underwriter
NIORD harbors a global vision in supporting offshore renewables. While numerous regions worldwide share ambitious goals for their offshore renewables industries, some have progressed further than others.
NIORD strategically divides its focus into five main areas:
A) UK
B) Europe – Mature Markets
C) Europe – Emerging Markets
D) Asia
E) Americas
In this first of two articles, we will be focusing on a) and b). The remaining areas will be covered in a follow-up piece to be published in the very near future.
These market groupings facilitate the management of existing as well as prospective projects over the next few years. As countries actualize their ambitions, adjustments to existing groups or the addition of new groups may be necessary. Nevertheless, this approach currently stands as a reasonably effective means for NIORD to manage its portfolio.
In this analysis, we offer an overview of current offshore wind conditions within our focus areas, considering both the present state and future ambitions of the involved countries. Additionally, we highlight countries not currently aligned with specific focus groups but possibly significant in the future.
A) The UK
The UK maintains its status as a prominent global leader in offshore renewables, boasting over 20% of global operational capacity. Only China surpasses the UK in terms of operational offshore farms. This dominance aligns with both short-term and long-term ambitions. Presently, the UK has seven projects under construction, aggregating to 7.8 gigawatts (GW), constituting nearly 60% of the country's existing operational capacity (totaling 13.6 GW). This is comparable to the entire installed capacity of Germany, which ranks third in offshore wind presence after China and the UK.
Looking ahead, the UK is embarking on a substantial number of floating wind projects, many of which show promising progress, primarily through the extensive Scotwind award. Ten and a half out of 17 planned auctions are set to be floating projects. Responding to recent industry challenges, the UK government has displayed a willingness to provide increased support. The average operational turbine in the UK is currently around 5 MW, a common size for Europe.
Moreover, the UK has a significant number of upcoming tidal projects, supported by substantial government backing.
B) Europe - Mature Markets
Belgium
Denmark
Germany
France
Netherlands
The group is dominated by bottom-fixed wind. The region has the benefit of a very well-developed supply-chain as well as infrastructure to support the operation of the industry. All group members are closely knit EU-members. There is a clear and solid pipeline of grid connection projects in this region for the up-coming projects.
Belgium has a short coast-line, however it is utilizing it very efficiently. The country’s grid operator Elia is currently developing the first “energy island” of the Belgian coast. Belgium has ~2.2GW of operational offshore wind with some ambition for future growth. Due to water depths all of Belgian offshore wind is bottom-fixed.
Denmark was the home of the worlds first offshore windfarm, Vindeby, in 1991. It is also home of Ørsted, currently the world’s most dominant offshore wind developer. Denmark has about 2.3GW of operational wind over 15 farms. However, as it was the cradle of the industry it also has a few older farms, and an average turbine size is less than 4MW. The nearshore ~350MW Vesterhav project is in construction, it being nearshore removes the need for an offshore substation. The 1GW RWE project Thor is also under development. The one which (in)famously was decided by coin-toss. Denmark has a strong outlook for offshore wind with about 35GW of future potential farms to largely be installed within the mid-2030s. Due to water depths all Danish offshore wind is expected to be bottom-fixed.
Germany has the world’s third largest offshore wind portfolio standing at about 8GW with an average farm size of about 300MW. This is about 60% of the UK’s portfolio, but at the same time it is the same as the rest of the countries of group C) Europe Mature Markets combined. The build-out started here alittle later than in Denmark, but from 2015 onwards very many projects became operational.
In Germany, TenneT, a Dutch company, has been the main responsible developer of the offshore Grid Connection with the German farms usually building a smaller offshore substation transforming from 33kV to 150kV for further export to TenneT HVDC substation. TenneT has several locations where more than one windfarm connects with one TenneT offshore grid connection. This method of development has enabled uniformity in building of substations in Germany, and in the Netherlands. Other grid operators in Germany includes for example 50Hertz (ELIA) and Amprion.
This means, that for example, when He Dreiht, a 900MW German farm had its construction insurance placed, it is placed without the Offshore Substation and export cables. Similar arrangements will be found in France, the Netherlands and Belgium.
Germany has about 2.9GW of wind being constructed with about 30.5GW of additional offshore wind projects in the pipeline. German projects will be bottom fixed only. Germany has some certification as a legal requirement, including operational requirements for follow-up.
France started later than the other countries in this group with its offshore wind build-out, however it is working hard to catch up. France has two operational wind projects, Floatgen a 2.3MW demonstrator for the BW Ideol floating wind design and the 480MW Saint-Nazaire project. The projects are in immediate vicinity of each-other. France also has about 2.5GW of wind being constructed. Including three floating wind projects, PGL (24MW), EFGL (30MW) and EOLMED (30MW) representing a total of 9x floating wind units to be installed in the Mediterranean. No other country has this many floating projects being built in parallel.
France has a long and varied coastline which implies a mix between floating and bottom-fixed wind. This is evident in its quite concrete planned 11GW of offshore wind relatively divided between floating and bottom-fixed wind. France will also award 3x 250MW of floating wind to developers during 2024. As for other countries in the group, France has a governmental body responsible for the offshore wind projects grid connection, RTE. RTE will have a similar role as TenneT in the Netherlands, or TenneT, Amprion or 50Hertz in Germany. The role of government owned grid connection owners is interesting for insurers as it does have the potential of different mentality than a wind-farm developer who may intend of divesting the grid connection after a year or two of operation to a commercial grid operator.
Netherlands has just shy of 3GW of operational wind over 10 projects, with an additional 3GW being built and a good portion of this becoming operational at the start of 2024.
The government of the Netherlands has planned an additional 57GW of offshore wind projects to become operational, with 47GW of these to be operational before 2035. All offshore wind in the Netherlands is bottom-fixed.
The TenneT 2GW programme will include building of approx. 14 2GW offshore grid connection points in both the Netherlands and Germany over the next years, 8 of these in the Netherlands. The projects will have farms feed array cables of 66kV AC into the stations prior to this being converted to 525kV HCDC and transported to shore.
IN the next installment, we will look at Europe’s emerging markets, as well as Asia and the Americas.
