Modelling of offshore wind Ms. Kristina Haaskjold, IFE

1. Offshore wind in IFE-TIMES-NORWAY
Kristina Haaskjold (kristina.haaskjold@ife.no)
Winter 2021
ETSAP meeating Kjeller, Norway 2021.11.30

2. 2
• The green transition requires emission reductions, e.g. through hydrogen and
electrification and new green industries to enable value creation in Norway
• Large resistance towards onshore renewable constructions, especially onshore wind
• Concession process for onshore wind stopped since April 2019
• Offshore wind is considered as a business opportunity for Norway
• But processes needs to be accelerated to stay in the offshore wind race
• Norway has a competitive advantage with expertise in the offshore and maritime
sector
Background and motivation

3. 3
Research questions
• Is it favorable to invest in offshore wind with current cost projections?
• What incentives are required to make offshore wind favorable?
• How is production distributed – to Norway or Europe?
• How will connecting offshore wind to mainland affect the Norwegian energy system, in terms of:
• Transmission grid expansion
• Export capacity
• Generation mix – impact on onshore wind, solar and hydro power
• Electricity prices
• Going forward:
• Hybridization with batteries/hydrogen
• Electrification of oil platforms
Objective: Allow for investments in offshore wind along the
Norwegian coastline

4. 4
IFE-TIMES-Norway
• Norwegian energy system developed in cooperation with NVE
• Model strengths
• Covers the entire energy system
• Detailed description of end-use(buildings, industry & transport)
• Model specification
• Regions: 5 spot price regions
• Model horizon: 2018-2050
• Temporal resolution: 4 seasons x 24h
• Limitation: no current modelling of offshore wind

5. 5
Methodology in IFE-TIMES-Norway
• A new wind turbine technology is included for offshore wind
• Each offshore area is modelled as a separate region
• Creating a new BookRegion in VEDA for all offshore wind farms
• Each offshore area has only the option to invest in offshore wind technology
and export cables
• No demand
• No other producing technologies
• Required input
• Technology data and cost for wind turbines
• Resource potential for offshore areas
• Possible trade links and corresponding investment cost
• Maximum capacity limits

6. 6
Modelled areas
• Based on NVE’s impact assessment which considers the effects on shipping,
petroleum, fishing and environmental interests
• NVE divides the areas in three categories: A, B and C
• Category A: areas that are well technically-economically suitable, has relatively few
conflicts of interest and can be linked to networks without major challenges by
2025.
• Categorization is as follows:
• Frøyabanken and Stadthavet: capacity of 1500 MW. Demand large grid
investments, not possible before 2030
• Utsira Nord and Sørlige Nordsjø II: Already opened areas
Category A Category B Category C
Sandskallen – Sørøya nord
Frøyagrunnene
Utsira Nord
Sørlige Nordsjø I
or
Sørlige Nordsjø II
Vannøya
Auvær
Trænafjorden – Selvær
Træna Vest
Nordøyan – Ytre Vikna
Frøyabanken
Stadthavet
Olderveggen
Nordmela
Gimsøy nord

7. 7
Parameters
Area Capacity
[MW]
Foundation type Investment cost 2030
[kNOK/MW]
Connections
Sandskallen 300 Bottom-fixed 25 528 NO4
Frøyabanken 1500 Floating 32 784 NO3
Stadthavet 1500 Floating 32 784 NO3
Frøyagrunnene 200 Bottom-fixed 25 528 NO3
Utsira Nord 1500 Floating 32 784 NO5
DK1
UK
Sørlige Nordsjø II 3000 Bottom-fixed 25 555 NO2
DK1
UK
• Costs: provided by NVE for bottom-fixed and floating offshore wind
• Only Utsira Nord and Sørlige Nordsjø II can have export cables to Europe (NVE)
• Investment start: 2030
• Export cables: Norway covers all costs
• Construction time: 2.5 years for offshore wind, 5 years for trade cables

8. 8
Parameters – trade cables
Area Investment cost [kNOK/MW]
Sandskallen – NO4 4 360
Frøyabanken – NO3 4 795
Stadthavet – NO3 4 360
Frøyagrunnene – NO3 3 965
Utsira Nord – NO5
Utsira Nord – DK1
Utsira Nord - UK
2 268
4 990
7 090
Sørlige Nordsjø II – NO2
Sørlige Nordsjø II – DK1
Sørlige Nordsjø II – UK
4 596
13 519
18 193
Basis Basis
Investeringskostnader - nettkostnader AC DC
Eksportkabel - sjøkabel (anskaffelse) NOK/kW/km 23 9
Eksportkabel - sjøkabel (installasjon) NOK/km 12 141 295 11 273 134
Eksportkabel - jordkabel (anskaffelse) NOK/kW/km 17 10
Eksportkabel - jordkabel (installasjon) NOK/km 3 063 183 3 063 183
Onshore nettstasjon (anskaffelse) NOK/kW 568 956
Onshore nettstasjon (installasjon) NOK/kW 298 298
Koblingsanlegg (anskaffelse) NOK/kW - 348

9. 9
Scenarios
Base:
1. Baseline– no restrictions and electricity prices based on NVE’s “Langsiktig kraftmarkedanalyse 2019”
• CO2 tax: 590 (2020) -> 2000 (2030) -> 4382 (2050) NOK/ton
2. Limited trade - No new trade cables and halved yearly availability
3. Subsidy – Investment costs are subsidized (e.g. ENOVA)
Low carbon:
1. Low carbon – CO2 tax equal to 5000 NOK in 2030, 10 000 NOK in 2040/2050
Electricity prices in Europe follow low-carbon scenario (EMPIRE – KPN FlexBuild)
2. Low carbon Extreme – no new onshore wind, high industry development
0
20
40
60
80
100
2018 2030 2040 2050
øre/kWh
Average electricity price
Low carbon - UK Low carbon - DK1 Base - UK Base - DK1 Base - NO
0
50
100
150
200
1 6 11 16 21 26 31 36 41 46 51 56 61 66 71 76 81 86 91 96
øre/kWh
Price duration curve - 2050
Low carbon - UK Low carbon - DK1 Base - UK Base - DK1 Base - NO

10. 10
Base scenario - results
Offshore investments
Sørlige Nordsjø II:
• Capacity: 3000 MW in 2040
• Yearly production: ~15 TWh (CF: 0.57)
• Trade: 2140 MW to DK1 – about 70% of wind park capacity
In context:
• Statnett anticipate 15 TWh offshore wind in 2040
• NVE assume no new capacity before 2030 and 7 TWh in 2040 (all to Norway)
• DNV GL: 7.4 GW and almost 35 TWh in 2050
→ Support schemes or other incentives are required to reach the goals, especially if production should be
connected to the Norwegian grid
Energy system impact
• Cost of system: 6.2 billion NOK
• 2 MNOK saved with offshore investment (0,04% of total cost)
• No difference in domestic electricity price or generation mix

11. 11
Limitations on trade with Europe
No new export cables:
• We have enough existing generation capacity within Norway to cover
demand – we even get lower onshore wind and solar investments
• Disabling new export cables prevent offshore wind investments
Cost of system: 6.26 billion NOK
• 55 MNOK more expensive than base
Scenario Average electricity price [øre/kWh]
2030 2035 2040 2045 2050
Base 40.0 43.0 40.0 45.5 44.0
Limited trade 35.0 41.0 43.0 45.5 43.5
Transfer activity
difference to base
+ 0.7
- 1.3
- 1.1
+ 15
DK1
+ 1.2
- 9 (Net)
NO4
- 2 SE1/SE2
- 2 SE2
- 1.7
- 6.7
- 10 DK1

12. 12
Subsidy on investment cost
• Large investment cost reduction is needed for substantial offshore wind production to Norway
• Capacity from Frøyagrunnene has little impact on the Norwegian energy system
• Stadthavet: NO3 is more self-sufficient with less import from NO4
Area Wind/Trade capacity Year of investment
70% reduction in investment cost
Sørlige Nordsjø II – DK1 3000 MW/ 2137 MW 2030
Utsira Nord – DK1 1500 MW/ 890 MW 2040
Frøyagrunnene – NO3 200 MW/ 130 MW 2035
85% reduction in investment cost
Sørlige Nordsjø II – DK1 3000 MW/ 2137 MW 2030
Utsira Nord – DK1
Utsira Nord – NO5
1500 MW/ 890 MW
111 MW/ 75 MW
2030
2035
Frøyagrunnene – NO3 200 MW/ 130 MW 2035
Stadthavet – NO3 1500/ 900 MW 2045

13. 13
Low carbon (CO2 tax and prices)
Energy system impact
• Increasing onshore wind and hydro investments
• Large investments in export cables to Europe (+ 5 GW)
• More hydrogen and biomass production
Main takeaways:
• Increasing prices in Europe favor offshore wind investments to Denmark
and the UK
• Norway has enough land based RE potential to decarbonize the energy
system -> offshore wind is not necessary
• New export cables are more cost-beneficial compared to offshore wind
Area Trade capacity (% of wind cap) Year of investment
Sørlige Nordsjø II – DK1 580 – 1680 - 1940 MW (65%) 2030-2035-2040
Sørlige Nordsjø II – UK 1580 MW (53%) 2030
Utsira Nord – DK1 960 MW (64%) 2050
7
18
22
27
32
8
22
27
30
32
0
5
10
15
20
25
30
35
2030 2035 2040 2045 2050
TWh
New land-based RES generation
Hydro - Base Hydro - Low carbon
Solar - Base Solar - Low carbon
Onshore wind - Base Onshore wind - Low carbon

14. 14
Low carbon extreme (high demand and no onshore wind)
Transfer activity
difference with
offshore
Area Wind/Trade capacity Year of investment
Sandskallen – NO4 300 MW/ 146 MW 2045
Frøyabanken – NO3 1500 MW/ 800 MW 2050
Stadthavet – NO3 1500 MW/ 900 MW 2045/2050
Frøyagrunnene – NO3 200 MW/ 130 MW 2040
Utsira Nord – DK1
Utsira Nord – NO5
1500 MW/ 200 MW
1500 MW/ 770 MW
2045/2050
2045/2050
Sørlige Nordsjø II – DK1
Sørlige Nordsjø II – UK
3000 MW/ 1940 MW
3000 MW/ 1575 MW
2030
2030
First scenario with cable from Utsira to Norway
Generation:
• All cheap generation potential is reached – solar, cheap ROR and REG
• Trade-off between offshore wind investments and reduced trade of
electricity
• By 2050 – All offshore wind potential is reached (35 TWh)
+1
TWh - 3 TWh
+ 3 TWh
+ 8 TWh DK1
+ 6.7 TWh UK
+ 0.7
TWh
DK1
+ 1 TWh
+ 5.5 TWh
+ 6.3 TWh
+ 0.8
TWh
+ 2 TWh
+ 5.4
TWh
- 0.7
TWh
+ 2 TWh
-2 TWh
-2.4 TWh UK

15. 15
Extreme scenario – impact on Norwegian system
Without offshore:
• Resort to most expensive ROR technology
• 15 TWh (2040) and 35 TWh (2050) less RE generation in scenario with no offshore
• 5 TWh less H2 production (of which 3 TWh in NO3)
• Resort to more LNG, biogas and fossil fuels for transport
• Large investments in battery storage in 2050 – 17 GWh
• Storage in commercial and residential buildings
• Distributed in NO3 and NO4
Cost of system:
• With offshore: 7.1 billion NOK
• Without offshore: 7.22 billion NOK
• 115 MNOK more expensive without offshore
0
100
200
300
400
500
600
700
800
2030 2040 2050 2030 2040 2050 2030 2040 2050 2030 2040 2050 2030 2040 2050
NO1 NO2 NO3 NO4 NO5
øre/kWh Extreme Extreme - no offshore

16. 16
Conclusion
• Sørlige Nordsjø II is the only area profitable from a system perspective with the assumed energy
system development
• Large subsidies on investment is required to make offshore wind competitive
• Norway has a lot of existing capacity and resource potential for cheap renewable technologies
• Export of offshore wind to Europe is preferred due to more favorable price conditions
• Offshore wind is beneficial in the case of high industry development and zero emission energy
system

17. Thank you!