Offshore wind farms are still a distant perspective, even though the first location permits were issued in 2012. After many years, a draft act on the promotion of offshore wind electricity generation, which is expected to accelerate offshore development in Poland, has been finally prepared. The period of public consultations of the bill ended on February 14th and there is a chance to complete the legislative efforts by mid-2020. Are the proposed solutions sufficient and will they serve their purpose? – writes Marcin Ścigan, Head of Renewables at Forum Energii.
Why offshore wind is important?
In the coming years, coal-fired power plants will be phased-out due to their age and costs. Offshore wind is a zero-emission source which may fill the generation gap in the Polish power system.
Offshore wind turbines are more productive than those on land. The capacity factors range from 40-50% (4,000 – 4,380 operating hours per year)[1] and may even rise to 58% in the next decade in new generation of turbines[2]. In the future, by using surplus energy to produce hydrogen, it will play an important role not only in the decarbonisation of electricity, but also of other sectors.
First wind farms in the Baltic Sea need to appear within 5-8 years for the offshore sector to serve its purpose. Therefore, it is necessary to speed up work on the law that will stimulate its development.
What does the government propose?
The draft act on the promotion of offshore wind electricity generation includes a number of good measures, which will certainly accelerate the investment process:
Fast track for the most advanced ones – by the end of 2022, projects with a cumulative installed capacity of no more than 4.6 GW will be able to apply for support without an auction procedure. Individual decisions will be approved by the European Commission (EC). Otherwise, it would be necessary to wait for the next few years until the supply of projects is sufficient to carry out an auction and ensure the required level of competition.
Predictability – auctions are planned in 2023-2028 for a total installed capacity of 5 GW. This volume may be increased by additional megawatts if the 4.6 GW pool is not fully used. It gives investors the right perspective and time to prepare projects. This is a comfort that has so far been lacking in other RE-related regulations – until now, information on planned auctions and volumes appeared only several months in advance.
Project development in stages – ontracts are awarded for a maximum of 25 years for the whole offshore wind farm, not for individual stages. As a result, after the official granting of support, the first erected turbines will be able to generate revenues during the construction of the next ones. Importantly, support is granted for a specific production volume[4]. For example, a 1 GW farm will receive support for production of 100 000 GWh over 25 years. An investor may use it in a shorter period of time, e.g. if subsequent stages of the wind farm are completed earlier than planned, or turbines will operate more hours per year than expected.
Grid connection – an investor will be responsible for the connection between a wind farm and an onshore substation. It will allow him to have a real impact on the progress of the entire project. This will increase the level of responsibility and costs, but there will be a possibility to sell this part of the investment to the transmission system operator.
Accelerated administrative procedures – necessary decisions are to be issued more quickly. For example, decisions on environmental conditions, water-law permit or building permit are to be issued within 90 days and are to be executed immediately. Also, possible appeal processes are to be shortened. Finally, the connection between a wind farm and an onshore substation will be treated as strategic, which should streamline its implementation.
What is not in the draft act?
The draft act will not address all challenges. Further government involvement in at least a few areas is needed to accelerate these strategic investments:
Consistent vision of the government – the draft act provides for the creation of at least 9.6 GW of offshore wind. However, recently published strategic documents[5] mention only 8 GW of those farms. The lack of a clear strategy makes it difficult to build trust among investors, which limits competition and increases investment costs.
Maritime Spatial Plan – it is due to be completed by the end of 2020. Its result should not affect the implementation of projects which already have a location decision. It is, however, important for the sector from a long-term perspective. The industry has already signalled the need to increase the area for the development of offshore wind, but it is necessary to reconcile various interests, e.g. in shipping or fishing.
Notification to the European Commission – its pace is difficult to predict, but constant dialogue between the Polish government and the EC is crucial. Different scenarios are possible. In 2018. Belgium was allowed to support three farms in just over a month after the formal request was submitted[6]. Beforehand, both parties were in regular contact in the socalled pre-notification procedure. In the case of France, this process took much longer. The decision to support the six farms was taken in July 2019[7]. This is more than 3 years after the first formal applications were submitted. The reason for this was the multistage exchange of information between Paris and Brussels, as well as legislative changes introduced by the French government.
Ports – without properly developed ports it will be extremely difficult to build wind farms at sea. Both container terminals, which will store elements of turbines, and smaller ports used for installation and servicing are needed. The terminals in Gdansk and Gdynia are largely ready, but investments in storage areas with adequate carrying capacity are still necessary. On the other hand, smaller ports are not adapted to the needs of the sector at all. There is discussion about Władysławowo, Ustka, Łeba or Darłowo – all these ports require urgent investments to expand and deepen the bottom.
When will the first offshore wind farms be constructed?
The draft act provides for a seven-year period for the construction of the farm from the moment of obtaining the contract. If any of the projects receive the green light by the end of this year, it must be completed no later than in 2027. The deadline of around 2027-2028 is important from the perspective of Poland’s energy security.
A long-term vision for offshore wind
Offshore wind enjoys not only social acceptance but also a broad political support from the government and the opposition. Its development is a great opportunity for Polish shipyards, local governments and the whole industry. That is why the national discussion on the development of this sector is multifaceted, but it is taking place in a perspective until 2040 at most.
Meanwhile, there are already clear signs from Brussels that offshore wind energy should play an important role in ensuring the EU’s climate neutrality by 2050. Especially as its competitiveness is increasing and it does not require financial support in some countries. A dedicated EU strategy is due to come out this year. One of the main objectives will be to intensify regional cooperation in order to maximise the benefits from huge infrastructure investments. It is worthwhile to start a discussion on the advantages of such cooperation for Poland, especially since offshore wind may become a Polish speciality.
Source: Forum Energii