Concept paper 5: requirements to develop
Ensure industry can progress
In order to proceed with the Hub-and-Spoke concept, changes are needed in policies, regulatory framework and energy market design. The Hub-and-Spoke concept with combined wind farm connection and interconnection functionality – and likely with P2X1 conversion – is shifting the paradigm for energy infrastructure development. It requires a reconsideration of policies, regulatory framework and market design to ensure stable market conditions, and enable anticipatory investments
and timely development of supply chains and innovation. Also, practical standardisation issues such as DC voltage levels require alignment. The current limitations of the regulatory framework for Hub-and-Spoke type of projects are related to:
- Time horizon – typically 10 years for binding grid planning processes, while large infrastructure projects require at least 10 years to develop and construct, will show benefits only in decades after and require anticipatory investment to bring value.
- Cost benefit analysis framework to assess the value of these projects are not (yet) equipped to handle hybrid assets or strongly sector-coupled projects.
- Assessment is largely project based, with only assessing value of isolated projects on a system.
It is conceivable to develop a first Hub-and-Spoke project within the current regulatory framework and market design, but reconsideration is required to properly incentivise stakeholders in the long term. Focus should be on reshaping the regulatory framework and market design such that it properly incentivises all involved stakeholders in the longer term throughout the energy transition. This process could result in voluntary agreements between stakeholders, or memoranda of understanding, but most likely intergovernmental agreements are required to conclude on these decisions for a first Hub-and-Spoke project.
The consortium has engaged with more than 10 leading and influential OWF developers to get feedback. The industry finds that taking a regional approach to planning new offshore wind assets across the North Sea would have considerable benefits, including to the North Sea Wind Power Hub concept.
1P2X includes power-to-gas (mainly H2 as well as methane) and other options (such as fuels, feedstock, food, oxygen, residual heat, etc.)
