Planning for integrated grid development

Catherine Banet, professor of law at the University of Oslo, head of the Department for Energy and Resources Law, and academic co-director at the Centre on Regulation in Europe (CERRE), discusses the importance of integrated planning to scale up the European offshore wind sector.

Under the Offshore Renewable Energy Strategy and REPowerEU, the European Union targets at least 300GW of offshore wind energy capacity by 2050. In April 2023, North Sea countries announced a similar target for their sea basin alone. Ambitions are high and rising.

Banet identifies four areas for targeted EU action to scale up offshore wind: planning, permitting, cross-border projects, and promotion of mutual and local benefits.

Banet stresses the importance of integrated planning across the subsectors of maritime, climate, energy, and transport. “The different responsible planning authorities also need to cooperate. And we have the overall steering instrument of the governance of the energy union with national energy and climate plans,” she explains.

Alongside planning, speeding up permitting is crucial. While integration between permitting for production and grid is limited, examples exist. Banet emphasises the need to simplify and accelerate permitting for cross-border projects, including hybrid grid solutions. This, she says, is “key in enabling a cost-effective and environmentally sound development of offshore wind resources in Europe”.

Mutual and local benefits

Banet underscores promoting mutual and local benefits. This includes fostering coexistence among interests and sectors, and ensuring local benefits through non-pricing criteria in offshore wind auctions. She notes that these principles are embedded in revised EU legislation, including the Renewable Energy Directive, state aid guidelines, and the Net Zero Industry Act.

“We cannot overemphasise the importance of collaboration when it comes to developing power systems in Europe.”

Grid development

Banet argues that “we will need a change of speed in grid development”. To date, only 7 per cent of the EU’s 2050 offshore generation targets are linked to the grid. Bridging this gap requires increasing generation and grid development simultaneously.

She explains that achieving targets requires a shift from national radial connections toward multipurpose solutions, hybrid projects combining production and interconnectors, as well as energy hubs or energy islands. Irish territory, part of two ENTSO-E priority corridors, illustrates potential for moving from radial connections to a more interconnected offshore energy system.

Banet notes that hybrid offshore wind projects are better enabled by offshore bidding zones rather than the home market approach. This approach, she says, better reflects physical flows, reduces grid congestion, and improves price formation. Domestic market design will remain relevant for setting different rules across countries, requiring legal clarification through regulatory alignment or bilateral agreements.

She adds that while a single regulator per sea basin is unlikely, high-level cooperation among regulators and offshore transmission system operators (TSOs) is expected. Cost and benefit remuneration models covering power sales, congestion, ancillary services, and guarantees of origin, must be assessed alongside market design rules.

Introducing offshore building zones will require supplementary tools, such as support schemes, contracts for difference, revenue compensation mechanisms, or investment mechanisms proposed by the EU. Banet stresses that while regulatory frameworks are still evolving, development should not be delayed: issues like anticipatory investments, grid connection regimes, and cost/benefit allocation models need clarification, but pathways exist for short-term project progress.

Cooperation

The International Energy Agency emphasizes that energy projects should account for economic, security, and environmental drivers. Banet says cooperation among European member states is key.

“We cannot overemphasise the importance of collaboration when it comes to developing power systems in Europe,” she states. She points to lessons from disruptions caused by the Russian invasion of Ukraine, noting that integrated cooperation has prevented blackouts in Europe.

Banet also anticipates further developments and innovations that will accelerate offshore energy rollout. She stresses the need for a future-proof market design to ensure a sustainable offshore wind industry.

“We need a common regulatory approach for market design offshore that will open for connecting new projects, new productions such as hydrogen and new consumption. With that, hopefully we have a future proof market design for a power system that includes offshore wind,” she concludes.