Project Summary

The scale of investment required to leverage Great Britain abundant offshore wind resource and decarbonise its economy by 2050 and power system by 2035 is vast. Developing the infrastructure connecting these resources to consumers, whether electricity or hydrogen, is expensive, technically complex, creates system operability challenges and can be disruptive to local communities.

This project seeks to explore and develop an open-source standard framework and accompanying capabilities to assess the impact of taking a cross-energy vector approach and co-locating assets offshore -- with a view to addressing partsof the challenges mentioned above and ultimately reducing costs to consumers.

Innovation Justification

Challenge themes

This project is highly aligned with all Round 3 Innovation Challenges and could apply against most challenge themes, demonstrating its relevance to the current GB energy landscape. The Alpha phase proposes to develop an advanced whole-system modelling tool to facilitate offshore power and gas system integration to support network planning and development. This scope of work is highly aligned with project scope 1, challenge 1. The project is led by NGET and will leverage expertise from a gas network, National Gas.

 

Discovery Learnings

The Discovery phase provided several valuable lessons which informed the Alpha phase scope, plan and leadership:

• Offshore infrastructure coordination could provide significant cost savings benefits such as investment and asset optimisation, reduced energy losses and lower congestion costs. These potential benefits need to be validated through advanced whole-system modelling.
• There are significant regulatory, and commercial barriers to enabling offshore system integration which need to be addressed.
• The size of electricity transmission investments required in the next decade is large and networks are looking for ways to accelerate and optimise new connection development. This contextual challenge logically informed the decision to change the lead partner from National Gas to NGET.

 

Beyond incremental innovation

During the Discovery phase, we conducted interviews with policy makers, regulators, and industry players on offshore system integration. This helped us identify innovation gaps, with input from stakeholders shaping the activities of the Alpha phase. The latter will integrate the world-leading experience of Copenhagen Infrastructure Partners and Orsted.

Innovation justification

The project aims to develop a novel offshore whole system optimisation model architecture and underlying assumptions that assess options across electricity, hydrogen, and carbon to support offshore infrastructure optimisation. This model will be used to understand the interconnectedness between vectors and assess alternative approaches to designing and operating energy systems. Additionally, the project will outline a set of market modifications that are important enablers of offshore energy hub (OEH) development (incl. artificial islands). The resulting business case for OEH development will be the first of its kind in the UK to be supported by advanced whole-system modelling and a route-to-market framework.

 

Readiness level

TRL: 3 progressing 5
Through the development of a modelling tool skeleton and initial market blueprint, this Alpha phase will be progressing the concept to validation in relevant environment (TRL 5).

IRL: 4 progressing 6
This project aligns with current UK and European technological research efforts. The Alpha phase will develop the framework and processes to scale the pilot project for commercialisation, demonstrating the effectiveness of the integrated technologies in processing and organising information.

CRL: 3 progressing 5
Offshore infrastructure integration is in demand, and the tools and processes for development have been identified. The Alpha phase will establish a blueprint for the tools, assess integration feasibility, and advance CRL to 5.

 

Size and scale

The Alpha phase involves developing a basic model and framework for offshore system infrastructure planning, including gathering necessary data and stakeholder insights. The Beta phase allows further development of the tool and framework to enable efficient infrastructure investments, meeting the innovation challenge goal.

Funding

This project investigates long-term network development, includes a high degree of risks in outputs and requires funded industry partner contribution. Thus, this cannot be funded as part of price control or other short-term network licensee BAU activities.

Counterfactual

This project counterfactual results in the planning and development of offshore infrastructure that fails to account for cross-vector consideration, potentially resulting in network overbuilt and higher costs for consumers.

Impacts and Benefits

In a Business-As-Usual (BAU) scenario, offshore electricity, hydrogen, and carbon infrastructure are developed separately without considering potential efficiencies that could be gained by integrating these systems. This approach could lead to missed opportunities for cost savings and slow down the transition to a low-carbon economy in the UK. This project aims to explore the benefits and opportunities of taking a multi-vector approach to planning offshore energy infrastructure including systems based on artificial islands. The evidence supporting the decision to develop an offshore energy hub approach will be assessed using the following metrics:

 

Financial -- Future reductions in the cost of operating the network
Electricity Transmission:

• Potential reduction in infrastructure costs thanks to reduced offshore transmission line requirements and improved utilisation of the existing infrastructure.
• Potential decrease in system operation costs and operability benefits thanks to improved capability to connect directly less constrained areas of the onshore grid, and enhanced stability in power flows from the hub to shore.
• Potential decrease in transmission losses attributable to offshore green hydrogen production and reduced loss factors in transmitting power to shore viaa dedicated hydrogen pipeline.
• Potential expedited transmission project delivery leading to reduced opportunity costs and a more rapid decrease in constraint payments.

Gas Transmission:

• Potential for identifying repurposing routes offshore, which could significantly decrease offshore hydrogen/CO2 transportation costs.
• Potentially further integration with the European hydrogen market leading to greater operational efficiency to deliver energy to GB.
• Greater coordination with the onshore hydrogen network development plan (e.g., Project Union) could result in onshore network investment savings.
• Greater volume of low-carbon hydrogen introduced at scale in the network is likely to increase the utilisation of the national hydrogen transmission network, resulting in a reduced cost per kilogram of H2 transported.

Financial -- cost savings per annum on energy bills for consumers

Consumer electricity bills are significantly linked to network costs (~25%) and system operation costs (~20%). Reducing these costs could result in significant cost savings for consumers.

Financial -- cost savings per annum on energy bills for users of network services

Offshore wind developers currently pay on average £12.5/kW in transmission charges (TNUoS). Greater offshore network coordination could help reduce network costs and TNUoS compared to the BAU scenario and as a result, making the UK a more attractive market for renewable investments.

Environmental -- carbon reduction -- indirect CO2 savings per annum

• Reduced transmission infrastructure would reduce energy sector's indirect emissions.
• Potential reduced grid losses would enable more low-carbon energy fed into GB energy mix.
• Potential acceleration of offshore wind and green hydrogen, thus accelerating carbon abatement in GB's energy mix.
• Potentially reduced nature and biodiversity impact

New to market -- services

Offshore energy infrastructure can enable new offshore commercial services such as maintenance of offshore infrastructure assets. Additionally, the developed infrastructure can serve military purposes, including surveillance and environmental monitoring.

Others that are not SIF specific

• Increased value of the offshore wind located close to an offshore hub, consequently creating benefits to the Crown Estate.
• The Discovery phase estimated job creation/maintenance benefits to be up to 3,740 jobs.

The project will help us understand if using a cross-vector approach could benefit UK consumers through lower infrastructure and system operability costs, and reduced environmental and community impact. The estimated benefits in the Discovery phase by National Gas and Guidehouse were significant (see Discovery report and attached CBA). This simplified approach needs to be revisited for a more precise assessment accessible to developers and networks and used to take multiple planning options into development. The Alpha phase aims to develop a comprehensive system modelling tool for investments in offshore energy hubs infrastructure.