Germany's offshore grid issues must be resolved by summer, says Dutch-owned German TSO, TenneT

By Rikki Stancich in Paris

Dutch-owned German transmission system operator, TenneT, is pushing Germany’s administrators for a summer resolution on addressing obstacles to Germany’s offshore grid development. Germany risks falling shy of its offshore wind target unless several key issues are swiftly resolved, warns the TSO.

For Germany to meet its offshore wind target of 10 GW by 2020 and 25 GW, equivalent to around 20 nuclear reactors, by 2030, several major issues will need to be addressed. These include critical chokepoints in the supply chain, offshore grid liability, long-term offshore grid planning and establishing an offshore grid operator.

Last Friday (February 17), TenneT submitted a detailed proposal for resolving these issues to Germany’s Ministry for Economics and Technology (BMWi).

Germany’s offshore wind sector faces several problems. The first, says Renate Hichert, spokesperson for Germany’s Federal Network Agency (BNetzA), is the rapidly increasing amount of offshore wind that must be connected onshore. The connecting cables previously commissioned by TenneT already account for 5.3GW. By 2022, additional offshore power connections of 6 GW are needed.

According to Ms Hichert, private sector engagement can play a role in resolving this issue. “While it is a costly undertaking, it is also an attractive, low risk investment prospect”, she says.

The market has already attracted infrastructure investors, such as Mitsubishi Corporation, which earlier this month took a 49% equity stake from TenneT in two German offshore high-voltage cable projects, BorWin1 and BorWin2. Mitsubishi’s equity contribution represents 20% of the expected combined capital expenditures of approximately EUR 1.2 billion for the two projects.

Cable crunch

Another major problem is the long lead times required for submarine cable supply. “There are only three suppliers globally and there is currently a lead-time of 40-50 months”, explains Ms Hichert.

The cable shortage threatens significant delays for connecting major offshore projects to the grid, such as RWE’s Nordsee Ost and E.ON’s Amrumbank West wind farms.

These delays will not only result in significant cost overruns; they are also undermining investor confidence in offshore wind. E.ON’s head of Climate and Renewables, Mike Winkel  recently told the Berliner Zeitung newspaper that E.ON cannot reach financial closure on two further projects because of the delays on the Amrumbank West project.

Who foots the bill for these delays remains unclear. Apportioning the liability for the current cost of delays - which could mount to hundreds of millions - will be a “very long process”, says TenneT spokesperson Stefan Wesselink. “This is why it is important that the liability issue is clarified by law”, he adds.

Offshore grid connection is a relatively new business and to date, liability has not been addressed in Germany’s legislation. Last Friday’s proposal to the German Ministry of Economics and Technology (BMWi) calls for legislation that clearly apportions offshore cabling risk liability.

“Liability should be insurable, but in order for this, it needs to be clear as to who is responsible for what part of the offshore grid,” says Mr Wesselink. “The alternative option is that the risk is socialised - by costing risk into the tariff paid by end users”, he adds.

All in the planning

The third issue addressed by TenneT in its proposal to the German administration relates to long-term planning for Germany’s offshore grid. Germany’s onshore wind sector will benefit from a ten-year binding plan tabled by Germany’s four TSOs, Amprion, TenneT, EnBW Transportnetz and 50Hertz-Transmission, (approved last December by BNetzA), to establish longer-term planning for grid expansion.

Currently, however, no such planning is in place for offshore wind. “We want to address this issue with the other TSO’s, the regulators and the legislative body in order to get long-term planning in place”, says Mr Wesselink.

TenneT proposes to design new offshore direct-current connection cables and to plan, finance, build and operate the future German HVDC grid. It advises that a new German direct-current grid operator should be created to manage this offshore grid.

Time critical?

In light of these major challenges, can Germany keep its offshore wind programme on track? While there are no fixed dates as to when the administration will act, Mr. Wesselink is adamant that swift action is essential for Germany’s offshore wind programme to succeed.

“Only when the new legislation has been drafted in line with our plans, will it be possible [for Germany to meet its offshore wind target]”. He says a legislative framework “should be ready by summer of this year”.

In the global picture, however, offshore wind is not crucial to Germany meeting its 2022 target of 35-40%, which coincides with the phase-out of its nuclear programme. In the first half of 2011, renewable energy supplied a record 20.8% of Germany’s electricity from wind, solar, biomass and hydro.

Analysis released Tuesday (February 22) by Frost & Sullivan indicates that it will account for 36% by 2020, with wind energy capacity growing by an average of 2GW per year.

In achieving Germany’s renewable energy targets, “onshore wind is more important [than offshore]”, says Ms Hichert. She says the figures speak for themselves. A worst-case scenario will see 43.9GW of onshore and 9.7GW of offshore wind built by 2022. The best-case scenario is 70GW of onshore; 17.7GW of offshore wind.

Ms Hichert confidently points out that, despite the delays and other obstacles to offshore wind deployment, Germany’s renewable energy transition targets will be met.

To respond to this article, please write to the Editor: Rikki Stancich