Benefits of an Integrated Power and Hydrogen Offshore Grid in a Net-Zero North Sea Energy System

Abstract

The North Sea Offshore Grid concept has been envisioned as a promising alternative to: 1) ease the integration of offshore wind and onshore energy systems, and 2) increase the cross-border capacity between the North Sea region countries at low cost. In this paper we explore the techno-economic benefits of the North Sea Offshore Grid using two case studies: a power-based offshore grid, where only investments in power assets are allowed (i.e. offshore wind, HVDC/HVAC interconnectors); and a power-and-hydrogen offshore grid, where investments in offshore hydrogen assets are also permitted (i.e. offshore electrolysers, new hydrogen pipelines and retrofitted natural gas pipelines). We compare these scenario results with a business as usual scenario, in which offshore wind is connected radially to the shore and no offshore grid is deployed. All scenarios are run with the IESA-NS model, without any specific technology ban and under open optimization. This paper also presents a novel methodology, combining Geographic Information Systems and Energy System Models, to cluster offshore spatial data and define meaningful offshore regions and offshore hub locations. This novel methodology is applied to the North Sea region to define nine offshore clusters taking into account offshore spatial claims, and identifying suitable areas for single-use and multi-use of space for renewable energy purposes. The scenario results show that the deployment of an offshore grid provides relevant cost savings, ranging from 1% to 4.1% of relative cost decrease (2.3 bn € to 8.7 bn €) in the power-based, and ranging from 2.8% to 7% of relative cost decrease (6 bn € to 14.9 bn €) in the power-and-hydrogen based. In the most extreme scenario (H2) an offshore grid permits to integrate 283 GW of HVDC connected offshore wind and 196 GW of HVDC meshed interconnectors. Even in the most conservative scenario (P1) the offshore grid integrates 59 GW of HVDC connected offshore wind capacity and 92 GW of HVDC meshed interconnectors. When allowed, the deployment of offshore electrolysis is considerable, ranging from 61 GW to 96 GW, with capacity factors of around 30%. Finally, we also find that, when imported hydrogen is available at 2 €/kg (including production and transport costs), large investments in an offshore grid are not optimal anymore. In contrast, at import costs over 4 €/kg imported hydrogen is not competitive.