Wind energy in offshore grids

Abstract

This cumulative PhD thesis deals with wind integration in offshore grids from an economic point of view. It is composed of a generic part and eight papers. As the topic has mostly been analysed with a focus on topology and technical issues until now, market-operational questions in offshore grids and investment implications under different regulatory frameworks are a hitherto underrepresented research field. They are addressed by this thesis. Offshore grids between several countries combine the absorption of wind energy with international power trading. However, the inclusion into an offshore grid affects the economics of an offshore wind park. It is shown that the spot market income is lower if an offshore wind farm is placed in an interconnector and subject to nodal pricing instead of having a national affiliation. Moreover, congestion in the interconnector can prevent the wind farm from correcting its wind forecast errors in a specific onshore balancing group. An analytical approach with a transmission system operator and a wind farm as stakeholders illustrates resulting incentives for strategic behaviour. Depending on the regulatory regime, they may be inclined to announce more or less generation than expected at the closure of the day-ahead spot market. This can lead to a suboptimal utilisation of the infrastructure and associated socio-economic losses. These and possibly undesired reallocative effects between the parties can be avoided if the regulatory regime is adjusted to reflect special characteristics of offshore grids. With an operational real options approach, it is furthermore illustrated how different support schemes and connections to additional countries affect the investment case of an offshore wind farm and the income of the transmission system operator. The investment framework has also been addressed with a policy study about possible combinations of support schemes and international cooperation mechanisms between countries to achieve their renewable electricity generation targets. In the near future, tendering of joint projects is a feasible solution. Case studies on the Kriegers Flak offshore hub in the Baltic Sea and on the question of offshore storage, applying the WILMAR Joint Market Model, complement these analyses. The study on Kriegers Flak shows that embedded wind generation approximately halves congestion rents. While building and operating an adiabatic cavern air energy storage appears technically feasible, several reasons are explained why this is inferior to an onshore solution from an electricity markets perspective. The measures addressed until now, transmission and storage, are complemented by an analysis of an alternative: curtailment of renewable generation. The acceptance of this measure will play an increasing role for a cost-efficient integration of renewables. An intuitive example is that it is not efficient to dimension offshore connections at the nameplate capacity of the wind park, but that accepting curtailment should be part of the optimisation. Combining results from the different papers leads to the conclusion that an integrated operation of meshed offshore grids and generation seems best. Strategic behaviour between actors is thus avoided, while stable investment conditions can be supported. A feed-in tariff or a combination of tendering and feed-in tariffs could be a suitable support mechanism, allowing a co-operation of generation and transmission. The regulatory and policy framework should be adapted to meet the characteristics of offshore grids. Doing so can foster the cost-efficient deployment of both transmission and generation.