Project Summary
Offshore Energy Hubs (OEH) integrate electricity/hydrogen production offshorebetween the UK and other European countries. OEHs could stimulate UK offshorewind rollout potential and support the development of a hydrogen economy. ManyEuropean TSOs are exploring this concept, but the UK is yet to fully consider this.
This project will explore potential benefits and associated costs of developingOEHs in the UK, developing scenarios that quantify benefits such as curtailmentreduction, grid losses reduction and infrastructure optimisation.
Future phases will explore what commercial models and market designs areneeded to integrate OEHs into the whole energy system and with Europe.
Innovation Justification
Innovative Aspects
The design of novel market approaches to govern and harmonize the integrationof Offshore Energy Hubs (OEH) into the UK and EU systems are the coreinnovative aspects. This will involve new market framework design, newprocesses, and potentially new market tools.
While the EU-UK Trade and Cooperation Agreement recognises the benefits ofoffshore energy production in the North Sea, there are currently no jointcommercial frameworks in place that optimise the governance and integration ofoffshore cross-zonal electricity/hydrogen grids development. This project is novelin how it considers offshore hydrogen-electricity interaction and EU/UKharmonization by identifying regulatory gaps and risks between the UK and EU.
Beyond incremental innovation.
The Cost-Benefit-Analysis (CBA) methodology, as well as market frameworksdeveloped for the North Sea Wind Power Hub (NSWPH) will be leveraged andadapted to the UK context.
Readiness Levels
TRL: 1 progressing 2
The concept of OEHs is still nascent for the UK. Through initial research includingtesting several concepts designs, their location and their feasibility, this Discoveryphase project will be progressing the concept to Basic Research (TRL 2).
IRL: 2 progressing 3
This project is compatible with existing technological research, such as the
Hydrogen Turbine 1 (HT1) pilot project, as well as the European research effortsthrough the NSWPH. By exploring how UK OEHs could integrate existingtechnological research, the discovery phase will demonstrate the compatibilitybetween technologies and framework to orderly and efficiently integrate andinteract (IRL 3).
CRL: 1 progressing 3
The current product is not functional without a clear route to market (CRL 1). Theaim of this project, throughout all phases, is to develop all the elements enablingthe commercialisation of OEHs, thus progressing CRL to 6. In Discovery, CRL isexpected to progress to 3.
Size and Scale
By exploring the concept and benefits of OEHs, as well as the processes neededto enable its implementation, this project is sized to progress the solution towardscommercialisation and unlock the SIF objectives such as curtailment reduction,without incurring the budget needed to implement it.
BAU
This project investigates how energy networks should adapt to potential long-termsystem development. Thus, this cannot be funded as part of price control or short-term BAU activities.
Counterfactual
The proposed innovation is novel, therefore has risk associated with the delivery. Itis dependent on the development of a future UK hydrogen network, but alsosimilar developments in Europe
Impacts and Benefits
Further work is required to progress the commercial codes and regulations required to unlock the development of a cross-zonal offshore whole systemeconomy. For this project, the key metrics used will be financial cost savingsstemming from curtailment reductions (£ associated with MWh saved), reductionin grid losses (£ associated with MWh saved), and in infrastructure overbuildreduction thanks to the development of Offshore Energy Hubs in the UK (£associated with MW of infrastructure saved).
Financial - future reductions in the cost of operating the network:
The supply-side optionality provided offshore to developers through Power-to-Hydrogen and greater interconnection with Europe, could significantly reduceoffshore wind curtailment, hence reducing constraints payments for theelectricity system operator, that are foreseen to reach over £2.5bn/year over thenext decade.
Better coordination between offshore hydrogen development and onshorehydrogen grid would facilitate and optimise hydrogen TSO operation.
Financial - cost savings per annum on energy bills for consumers:
As mentioned, a significant decrease in constraints payment will reduceconsumers bill across the UK.
Better coordination between offshore and onshore hydrogen infrastructuredevelopment could reduce the potential for overbuilding infrastructure, henceproviding savings on non-energy costs for customers.
Increased supply-side flexibility for offshore wind developers could helpsignificantly reduce wholesale price volatility. Thus, reducing peak energy pricesthat particularly impact vulnerable consumers.
Revenues - creation of new revenue streams:
Offshore Energy Hubs can provide additional revenue streams for offshore winddevelopers through power-to-hydrogen, as well as the potential to export energyto Europe.
Environmental - carbon reduction -- indirect CO2 savings per annum:
Additional revenue streams for offshore wind projects could accelerate the paceand scale of such developments by strengthening developers' business case.
New to Market -- Product, Process and services
This project will focus on the creation of new market products, processes and/orservices that unlock the above benefits through enabling and optimising thedevelopment of cross-zonal Offshore Energy Hubs. The direct benefits realisedthrough project delivery are the creation of new to-market products (e.g., joint orinterlinked Offshore Bidding Zones), processes (e.g., co-optimised maritimespatial planning and permitting), and/or services that create new revenuestreams for offshore wind developers, incentivising them to invest into OffshoreEnergy Hubs.
