Offshore Wind Energy in Germany:

System Benefits and

Cost Reduction Potentials

Presentation of study results

from prognos/fichtner and Fraunhofer-IWES

DFBEE-WAB; Offshore-Konferenz, 20 Jan. 2014 Bremerhaven

Andreas WAGNER Stiftung OFFSHORE-WINDENERGIE German Offshore Wind Energy Foundation

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I. German Offshore Wind Energy Foundation

o Independent, non-partisan institution to support the development of

offshore wind energy, founded in 2005

o Platform for offshore wind (and maritime) industry, for policy-makers

and research-oriented stakeholders

o Board of Trustees - key industry & policy stakeholders

o PR and public acceptance activities,

o Policy initiatives & studies

• OffWEA project

Consulting and support for the federal government in

realising and advancing the German offshore wind energy strategy

• WINDSPEED

• SEANERGY 2020

• Interreg Projects:

4POWER, South Baltic OFF.E.R.

I. The OffWEA Project

Consulting and support for the federal government in realising and

advancing the German offshore wind energy strategy.

The German Offshore Wind Energy Foundation and its project partners

on behalf of the Federal Ministry for the Environment

Project duration: 2011 - 2014

Information Platform

www.offshore-windenergie.net

Incl. calculation tool for offshore LCOE

http://www.offshore-windenergie.net/wirtschaft/stromgestehungskosten

3 © SOW E.ON Netz D. Gehring © SOW E.ON Netz D. Gehring © SOW E.ON Netz D. Gehring

II. Spatial Planning and Permitting for

Offshore Wind Farms in Germany (EEZ)

III. Status Quo Offshore Wind Licensing

95 applications for offshore wind farms in German EEZ (78 in North Sea), 33 projects licensed (incl. 3 prototype turbines) – Total capacity 8-10 GW

North Sea > 80 % of projects, Baltic Sea < 20 %

II. Status Quo Offshore Wind Construction

III. Offshore grid connection projects –

German North Sea

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Riffgat

KS Diele

KS Dörpen West

UW Emden Borssum

BorWin2 BorWin1 BorWin4

HelWin1

HelWin2

DolWin2 DolWin1 DolWin3

alpha ventus

BorWin3

UW Inhausen

Nordergründe

KS Büttel

KS Emden/Ost

UW Hagermarsch

SylWin1

Project Capacity

(MW) Year of

operation

In operation

alpha ventus 60 2009

BorWin 1 400 2010

Riffgat (delayed by > 6 months) 108 Feb. 2014

Under construction/ awarded

BorWin2 800 2015

DolWin1 800 2014

DolWin2 900 2015

HelWin1 576 2014

HelWin2 690 2015

SylWin1 864 2014

Nordergründe 111 2015

DolWin3 900 2018

Ʃ built / awarded 6.209

In tender phase

BorWin3, BorWin4 1.800 ???

To be tendered until 2023 according to O-NEP2013

6 DC-connections 5.400 Source: TenneT, 2013, updates SOW 2014

Initial Offshore Grid Structure HVDC cable routes & platforms

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IV. Study on cost reduction potentials of

offshore wind energy in Germany

Partners –

Commissioning organisations and companies

Published August 2013

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IV. Study assumptions: 2 offshore wind scenarios at 3 different sites (North Sea)

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Economies of scale - increasing competiton lead to higher cost reduction

potentials in scenario 2

IV. Projection of levellised cost of energy (LCOE) in €cent/kWh (real terms, example of site B)

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IV. LCOE < 10 ct/kWh by 2023

On average, 31 % cost reduction (Scenario 1) and 39 % (Scenario 2)

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Recommendations - Policy and Regulatory Environment

Stable legal and political framework conditions

Define standards for components and for grid connection (platforms)

Simplify certification and permitting criteria

Recommendations for Industry towards techology innovation:

Optimise plant technologies towards maximum energy yield/operational hours

Optimisation of existing support structures and development of new ones

Improve installation logistics

Intensify R&D efforts

Recommendations for

Industry stakeholders

to improve efficiency Development of joint installation

and O&M concepts

Intensified efforts for serial &

automated production

IV. Realising cost reduction potentials requires active commitment and participation of all stakeholders

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IV. Long lead times for OWF development

4-6 Years

1-2 Years

2-4 Years

20 Years 5 Years

1-2 Years

Project

development

Financial

Negotiations

Construction Operation Phase Extension

of operation

Decommissi

oning

Total project lifetime 27-37 years

FID

Commissioning

Construction Permit

© Prognos/Fichtner, 2013

Idealized (!) Project Schedule

Stable, long-term reliable political framework essential!!!

1. Energiewende requires 800 TWh

from wind and solar (by 2050) –

can only be realized with large

offshore wind capacities!

2. Offshore wind leads to reduced cost

for flexibility measures – lowest

cost option by 2050

3. Offshore wind has considerable

power plant characteristics –

important for security of supply

(provision of balancing power, high

schedule reliability, etc.)

4. Stable, continuous expansion of

offshore wind capacities required to

harvest energy system benefits and

cost reduction potentials

Energy System Benefits of Offshore Wind

Key assumptions/results

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Study launched in Nov. 2013,

(EWEA Offshore 2013)

Primary Energy Consumption 2050

80 % RE,

20 % fossil fuels

Electricity Production in 2050

Sharp increase due to higher shares

of CHP, e-mobility, Power to heat &

Power to gas.

95 % from RE

Fossil fuels mainly for balancing

requirements

Energy Mix Transformation in Germany

2011-2050

15 © Fraunhofer-IWES, 2013

RE Potential (Wind, PV) and its limitations

Generation Mix assumptions

Scenario input -

optimum distribution of wind/PV

Scenario Assumptions - Capacity (GW) and Electricity

Production (TWH) Optimized Onshore PV Growth

Growth Scen. Growth Scen. Scenario

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Offshore wind e. share (%),

related to total wind e. production

Win

d (

on

- a

nd

off

sh

ore

) sh

are

(%

), r

ela

ted

to

FE

E (

win

d,

PV

co

mb

ine

d)

© Fraunhofer-IWES, 2013

Scenario Results Overview of annual flexibility costs and LCOE (2050) in the scenarios

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Optimized Growth Scenario:

€ 1-6.2 bn total cost savings/year

Optimized Growth Scenario:

€ 2.9 – 5.6 bn flexibility cost savings/year

Power Plant Characteristics - Offshore wind:

Steady electricity production/high availability

VI. Legal Framework for Offshore Wind Energy The Renewable Energy Act - EEG

Support for renewable energy since 2000 – EEG (RE Act) - specifies remuneration,

technology differentiation Issues in the past for offshore wind (prior to 2009)

No investments due to insufficient remuneration for offshore wind energy (9,1 ct/kWh)

EEG of 2008 (entered into force on 1st Jan. 2009)

Increase of initial Feed-in-Tariff (FiT) to 13.0 ct/kWh,

plus starter bonus of 2 ct, granted for 12 years

after commissionig (if commissioning before 1 January 2016)

EEG of 2011(entered into force on 1st Jan. 2012)

Compressed FiT:

Option to claim an increased initial rate of 19 ct/kWh –

only granted for 8 years after commissioning,

afterwards FiT drops to 3.5 ct/kWh

Important boost for investment decisions

New issues since 2013 – Federal elections Sep. 2013

“Electricity price brake” (Strompreisbremse) – public debate

Currently, proposals on EEG (RE Act) reform until summer 2014 –

2-year-extension of compressed FiT proposed

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VI. Offshore Wind Energy in Germany –

An illustration of initial positive results

Positive operational results: - alpha ventus: > 4.450 full load hours in 2011 (267 GWh) 15 % above expectations, - Baltic I – similar results; turbine availability 98 %

Important contribution to energy system reliability!

1 billion Euro already invested along the German coast - Port infrastructure, production facilities (offshore turbines/components), construction vessels, (converter) platforms etc. Vast opportunities for maritime industries!

10 billion Euro investment for Offshore Wind Farms 8 OWP under construction by end of 2013

1/3 cost reduction potential by 2023 – provided a steady project pipeline can be triggered by legal framework

18,000 jobs created by 2012 (98,000 jobs in onshore wind) Need for new and adjusted professional and vocational training

and university education courses!

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THANK YOU!

Andreas Wagner, managing director

Berlin Office Schiffbauerdamm 19, 10117 Berlin

Phone: +49-30-27595-141

Fax: +49-30-27595142

berlin@offshore-stiftung.de

Varel Office

Oldenburger Str. 65, 26316 Varel

Phone: +49-4451-9515-161

Fax: +49-4451-9515-249

info@offshore-stiftung.de

Studies available at:

www.offshore-stiftung.de www.offshore-windenergie.net