The International Energy Agency has released an update on Renewable Energy for Industry: Offshore Wind in Northern Europe. This note expands on the findings of the recent IEA Insight Paper on renewable energy for industry, released in November 2017.
This update note by Cédric Philibert of the IEA Renewables Energy Division explores the potential for decarbonising the European industry by replacing fossil fuels with electricity from offshore wind in Northern Europe, either directly or via hydrogen production.
Replacing fossil fuels as energy sources, feedstocks and process agents in the European industry would require large amounts of clean electricity. The technical potential for renewable electricity production from offshore wind appears indeed large in Northern Europe. The potential for profitable substitution is significant when electric technologies allow for large energy savings. A broader substitution may require high carbon prices, and in some cases may have to go through the production of hydrogen.
Low carbon hydrogen may also be produced from fossil fuels with carbon capture, possibly at lower costs than from electrolysis run on offshore wind power. And storable and transportable chemicals and fuels may be imported from areas with better renewable resources at lower costs. Nevertheless, reduced energy dependence from fossil fuel imports, and reduced price volatility of inputs essential to industry may justify an expansion of offshore wind capacities to specifically contribute to the decarbonisation of European industries.
Offshore wind power, alone or in combination with other renewable energy sources, could be deployed in European seas to specifically respond to the needs of the European industry for energy, process agents and feedstocks in replacement of fossil fuels. This would come on top of its likely contribution to responding to current and forthcoming usual electricity needs.
Over 18 GW of offshore wind power was installed by end 2017, of which over 16 GW is in Europe. This is expected to increase by 22 GW over 2018-2022, of which a further 14 GW are in Europe. The last two years announced spectacular cost reductions in the Netherlands, Denmark, Germany and the United Kingdom, through tender results for turbines to be commissioned in the next five years. Increasing competition, technology improvements and lower financing costs combine to explain this trend. Based on recent auction results the levelised cost of generation from future bottom-fixed offshore turbines can be estimated in the range of EUR 55 to 70/MWh.
The potential of offshore wind in Northern Europe was recently estimated by WindEurope (2017). According to that study, the gross resource potential from five nautical miles from the shore to the limit of the Economic Exclusive Zones of EU member States (including the United Kingdom) exceeds 10 terawatts (TW) and could deliver 50 000 TWh/y of renewable energy in three key basins (Atlantic, North Sea and Baltic). This compares to the current total generation of electricity in the European Union, of 3 200 TWh in 2015.
The generation potential from offshore wind significantly exceeds any deployment based on currently-projected electricity demand. This presents a significant opportunity for renewable electricity from offshore wind to support large scale decarbonisation of European industry if specific strategies and policies were implemented. This would require hundreds of GW that could generate thousands of TWh – well beyond the electricity demand that currently figures in climate-friendly scenarios, notably in generating hydrogen from electrolysis of water.