Baltic Sea may become the second European leader in offshore wind farm output, next to the North Sea. This is an opportunity to develop the Polish energy mix and the entire supply chain industry.

We could learn both from the Danes. This is what participants of a study visit organised by the Polish Wind Energy Association and the Lower Silesian Institute for Energy Studies (DISE) in cooperation with the Embassy of the Kingdom of Denmark learned.

A visit for more than 50 persons, including representatives of Ministry of Energy, companies interested in implementation of offshore wind farm projects in the Baltic Sea as well as consultants and journalists was held on 9-11 April.

We travelled more than 720 over three days, watching Danish experiences related to wind energy development.

Danes: offshore wind pioneers

They built the first offshore wind farm in the world in 1991, in the Baltic Sea. Today Denmark operates 1.3 GW of offshore installed capacity, and exhibits ambitions for much more. By 2021 they want to double their offshore capacity and reach 5 GW by 2030.

Poland, in accordance with the draft energy strategy of the state, is planning to build more than 10 GW in the 2040 perspective. The government noticed the potential of the technology due to the substantial increase in the efficiency of offshore turbines and the ensuing decrease in electricity production costs.

Data presented by State of Green, an association of Danish companies, associations and Ministries of Energy and Climate, Agriculture, Economy and Foreign Affairs, demonstrate that wind energy already is the least expensive source of electricity: 1 MWh produced onshore costs 55 EUR, whereas offshore – 65 EUR.

Therefore, wind farms may compete with the conventional energy sector, where the price of 1 MW reaches 70 EUR if produced from gas and 72 EUR from coal.

“The development potential of the offshore wind energy sector has never been so substantial. Paradoxically, it has never been so difficult due to tremendous cost pressure over the entire supply chain,” said Andreas Dalegaard from the Danish Wind Energy Association.

Wind energy technology costs will continue to decrease as efficiency increases. The latter improves due to increasing turbine capacity and tower height. Offshore machines grow to monstrous dimensions. Over the last three decades the capacity of a single machine increased more than 20-fold. “The largest wind turbines in operation today reach 8 MW of capacity each. However, this changes rapidly, for 10 MW and 12 MW machines are already planned in new projects,” said Aneta Wieczerzak-Krusińska, PWEA Spokesperson.

“Poland may benefit from the Danish experience, in particular if we want to follow their example and create as much value added as possible around offshore wind energy. That value is to be found in the broadest possible supply chain for the industry. Already today our companies are capable of providing components for offshore wind farm project corresponding to approximately half of the entire project value. Over time,” PWEA President, Janusz Gajowiecki assured, “the share could increase to 90 percent.”

“A prerequisite is the increase in the output of such companies. This entails costly and time-consuming investments, which our suppliers and sub-suppliers declare only when specific regulations for the offshore wind energy sector will be presented,” PWEA President added.

 

 

 

During the visit to Denmark the Polish delegation toured the offshore wind turbine nacelle factory in Lindo as well as the converter factory in the port of Esbjerg, both owned by MHI Vestas Offshore Wind.

The plants are not only a perfect example of transformation of the offshore industry working to the benefit of the Danish economy, but may also constitute a model for the transformation of regions dominated today by heavy industry. The sites where MHI Vestas is manufacturing offshore wind turbine components hosted shipyards – still at the beginning of the 2000’s.

When the shipyards were shut down, their employees could find jobs with us. Everyone who applied was employed in our newly established plant, HMI Vestas representative assured. However, she does not provide the number of such transfers.

The nacelle factory is aiming to improve its output – today a single nacelle is produced over two to three weeks. However, due to trade secret the manufacturer does not disclose monthly output.

Nonetheless, the Danes stipulate that local content was never the aim in itself. Therefore, there was never a requirement to include domestic companies in the offshore supply chain. The lowest production costs under a competitive bidding process were crucial. The 600 MW Kriegers Flak project proposed the lowest price to date – 49.9 EUR/MWh. The low price could be achieved because Denmark pays the cost of wind farm connection to the national grid, and the installation itself is located in the proximity of similar facilities.

The wind farm, owned by the Swedish utility Vattenfall, will feed first electricity to the grid in 2021.

Obviously, provided that the project does not encounter any delays. For two other projects the Swedish utility already had to extend the time for completion due to additional environmental studies resulting from local community protests. Andreas Dalegaard from the Danish Wind Energy Association reminded that people requested the wind farms to be built further away – as much as 50 kilometres from the shore. However, construction costs and the price of electricity produced in an installation increase together with its distance from the shore.

Did you know that:

• The cost of installation of 1 MW of offshore wind farm capacity in countries with plain rules and developed supply chain is PLN 10-11 million
• The cost of installation of 1 MW of offshore wind farm capacity in countries only starting to develop the technology is PLN 12-13 million 

In PWEA opinion, Poland also needs educational actions featuring offshore wind energy. The offshore wind industry, which is only starting to emerge in Poland, may encounter social acceptance issues.

Today, the awareness among Polish citizens what offshore actually is, is very insignificant. This is clearly visible in the public opinion poll carried out by Indicator upon request of PWEA.

The final design of operational aid for offshore wind in Poland has not been determined yet. Furthermore, it is unknown whether Polskie Sieci Elektroenergetyczne as the transmission system operator will incur connection costs, or whether it will be the investors themselves who will have to pay for it. In Denmark it is Energinet.dk (PSE peer) is responsible for the construction and costs of such a connection.

The advantage for the operator is the capacity to maintain integrity of the newly developed network; however, it is fully responsible for environmental impact assessment of the connection. The investors, in turn, take advantage of substantially lower investment costs.

In accordance with representatives of Energinet.dk, whose headquarters in Lindo we visited on the second day of the study visit to Denmark, only conventional units exhibiting sufficient flexibility will remain on the market. The Danes already finished their homework in that respect and modernised the utilities that for many years to come will secure the operation of the weather-dependent renewable sources, including wind farms.

They also introduced reserve capacity schemes.

If we want to discuss the increase in RES efficiency and efficient energy transformation, we cannot confine ourselves to system balancing within the boundaries of Denmark itself. Interconnectors will continue to be of value to us. This is what the common European market is about, representatives of the Danish operator stressed.

In their opinion offshore wind turbines may tip the balance of the now-occurring transformation. The inexpensive energy produced by such turbines, following its transformation into gas, may be transmitted over large distances.

A visit to the Anholt Wind Farm

The three-day visit was crowned by the tour of the Anholt Wind Farm with a capacity of approximately 400 MW. Its owner – Ørsted (formerly DONG) – was given a certain flexibility in the location of 111 turbines with a capacity of 3.6 MW each. The optimum farm layout enabled maximisation of its output. Today, Anholt achieves capacity factor reaching 50 percent.

The wind farm enabled the nearby island – previously powered by Diesel generators – to gain connection to the Danish grid. Its inhabitants benefit from broadband Internet.

 

Today, Baltic is in the centre of focus of many entities, both investors and financial institutions. Projects in the Polish Baltic Sea are being developed by Polish companies, such as Polenergia, PGE or PKN Orlen as well as foreign utilities, such as EDPR. Ørsted is also willing to get a piece of the Polish Baltic pie for itself. Furthermore, the market is being sounded by Lithuanians and Estonians.

Will we reproduce the Danish success in the Baltic Sea? It mostly depends on the politicians. The foundations for the development of the Polish offshore wind potential have been laid by including the technology in the draft Energy Policy of Poland. However, the sector shall be founded on stable regulations. Without statutory solutions for the offshore sector neither the investors will hurry with investing substantial funds nor the industry will invest in more output.

The industry needs time and stability to cope with future orders. Clear rules are also required by investors and institutions financing projects. Therefore, we bank on the government adopting dedicated offshore wind regulations already this year, not only to lay down the support scheme for offshore wind, but also to specify the issues related to the emerging market in other legal regulations, Gajowiecki said.

The market is awaiting the legislation regulating the emerging offshore wind energy market, promised by politicians. The document is expected prior to the autumn Parliamentary elections.

The outlook of the offshore wind energy sector will be discussed in May in Szczecin during the Pomeranian Offshore Wind Conference.

Did you know that:

• Electricity from the Baltic Sea may be produced in 2022 in the most advanced project developed by Polenergia and Equinor
• Subsequent offshore wind capacity will join after 2025