Elia Group and Ørsted launch paper to advance offshore hybrid projects

Elia Group and Ørsted launched a joint paper to help Europe overcome the barriers impeding the development of hybrid projects that link two or more countries together.

The paper aims to help Europe harness the full renewable energy potential of its seas and ensure equitable distribution of clean power amongst countries.

The launch was attended by Tinne Van der Straeten, the Belgian minister of energy; Lars Aagaard, the Danish minister for climate, energy and utilities; and Ditte Juul Jørgensen, director general for energy at the EU Commission.

“We are launching our vision paper at a crucial moment. The climate agenda is increasingly becoming an investment agenda so that Europe can reduce its dependence on fossil fuels and retain industry. We are facing European elections and new legislative initiatives will further the implementation of the Green Deal. Our proposals aim to encourage new ways of thinking and discussions between all stakeholders so that we can help Europe harness the full renewable potential of its seas while more effectively distributing the green electricity produced among its countries,” said Catherine Vandenborre, Elia Group’s interim CEO.

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According to Elia Group, while offshore hybrids are a crucial element for securing Europe’s green transition, to date, only one such project, the Kriegers Flak – Combined Grid Solution, which connects Denmark to Germany, has been realised.

The main reason for this is the current regulatory framework supports the development of either generators or interconnectors, rather than facilitating assets that include both, as is the case with hybrid projects.

The paper also cites that planning strategies tend to prioritise individual national interests, meaning that cross-border and regional solutions are sidelined.

Stated Vandenborre in the paper: “Current planning approaches are still focused on individual countries, meaning that cross-border and regional solutions are left out. As a result, there is no mechanism for ensuring that the costs of hybrid interconnections are shared out and borne by all the parties and countries who benefit from them.”

Recommendations for hybrid projects

The paper states that purely national solutions will be insufficient to ensure the success of the energy transition and promotes a more regional perspective.

Hybrid interconnectors are critical to ensure counties with fewer renewable resources can access clean power, i.e. these projects ensure a more equitable distribution of green electricity.

The paper makes three recommendations to support the deployment of hybrid projects:

• Regional planning at sea basin level that prioritises projects with the highest potential in terms of generating socioeconomic welfare and reaching net zero.
• This regional planning at individual sea basin level should be accompanied by regional Offshore Investment Banks that would aim to allocate existing funding streams for each sea basin area in a more efficient manner to maximise impact, with private investors invited to contribute.
• A review of the framework for hybrid interconnectors is needed, with a specific focus on the fair distribution of risks and benefits amongst transmission system operators, wind farm developers and society at large. Two alternative approaches are proposed in the paper: firstly, capacity based 2-sided contracts for difference; and secondly, a ‘Commercial +’ approach, focused on enabling power purchase agreements for offshore wind farms connected to two or more markets.

Ultimately, Elia Group and Ørsted suggest that EU countries encourage hybrid projects, as more projects will encourage a faster learning loop in terms of commercial, technical and regulatory aspects and accelerated timelines.