In late January, energy ministers from nine North Sea countries met in Hamburg to discuss future cooperation on the development of the North Seas. Although collaboration enjoyed low-level political support in the run-up to the summit, the scale and nature of the benefits that cooperation could bring were less concrete. In this context, THEMA was asked by Ørsted to conduct a wide-ranging analysis that included work to assess the potential impacts of cooperation on offshore power system development in the North and Baltic Seas. The work also quantified the specific impacts of planned and potential cooperative projects, and developed approaches to realise such projects by securing mutually beneficial agreements between governments and among commercial parties.
Cooperation in this context is pivotal to realise novel project concepts, in particular:
- Hybrid projects, in which offshore wind parks are connected to multiple countries, and
- Cross-border radial connections, in which offshore wind farms in one country’s waters are connected directly to another country’s grid.
To assess the effect of these options, we used THEMA’s power market model to determine optimal system development under scenarios that differed in terms of the extent to which such cooperative connections were allowed. As part of this exercise, we simulated hourly operations across multiple weather and demand years out to 2050.
The implied value of enabling such cooperative projects is considerable, reducing the potential costs of Europe’s electricity supply by €48 billion over the decade from 2040 to 2050 and lowering average power prices by more than €1 per megawatt hour. These savings flow from four reinforcing effects. Specifically, cooperation among countries bordering a sea basin:
- Enables development of the most cost-effective wind sites across the region, rather than limiting investment to national waters where conditions may be less favourable
- Reduces wake losses — the drop in energy output that occurs when upstream wind farms disturb airflow to neighbouring turbines — through better regional spatial planning
- Increases utilisation of offshore transmission cables, which can carry both wind power and cross-border trade flows rather than serving a single wind farm, and
- Strengthens interconnection across the European power system, allowing lower-cost generation to displace more expensive alternatives and improving resilience to weather and commodity price shocks.
These findings came at a pivotal moment and provided an evidence base for discussions at the Hamburg North Sea Summit in late January. Here, energy ministers from Germany, Belgium, Denmark, France, Ireland, Luxembourg, the Netherlands, Norway and the United Kingdom signed a joint declaration committing to develop up to a third of North Seas offshore wind through cooperative projects — up to 100 GW of the total 300 GW target. The declaration goes beyond aspiration, setting out plans to identify relevant projects and embed offshore cooperation in European power system development. As such, it represents a significant milestone in recognising the North Sea basin as a shared energy asset as opposed to a patchwork of national waters.
