5.2 Results
5.2.6 Regional policy cooperation
Ambitious GC scenarios due to high electricity prices in Poland. The high power prices in Poland are the result of high CO2 prices combined with a limited access to cheap renewable energy resources, such as onshore wind power in Poland, and should be interpreted with some caution.
Hubs 3 and 4, located further north in the Baltic Sea, suffer from comparatively low market values and do not generate net cost savings under either the Low or Ambitious scenarios by 2050. Therefore, a sensitivity analyses has been carried out, to assess the overall scenario economy without those two hubs. See section 5.2.7.
More information on the cost and market value of the individual hubs is available from Appendix D.
Table 5-4 LCOE* and MV per hub in the Low GC and the Ambitious GC scenarios
LCOE* MV LCOE minus
MV Low Grid Cooperation scenario
2030 Hub 1 55.2 53.8 1.5
Hub 2 69.5 55.4 14.1
Hub 3 - - -
Hub 4 60.5 38.4 22.1
2050 Hub 1 48.8 52.6 -3.7
Hub 2 58.1 82.6 -24.5
Hub 3 52.7 37.3 15.4
Hub 4 51.1 39.9 11.2
Ambitious Grid Cooperation scenario
2030 Hub 1 51.9 52.5 -0.5
Hub 2 54.8 62.7 -7.9
Hub 3 58.4 39.9 18.4
Hub 4 56.1 38.6 17.5
2050 Hub 1 46.7 49.9 -3.2
Hub 2 52.0 89.5 -36.5
Hub 3 51.8 33.5 18.3
Hub 4 54.5 39.5 14.9
Note: * Including costs for both offshore wind power and the hub connections. LCOEs incl. hub costs, MV incl. congestion rent. There is no capacity at Hub 3 in Low GC scenario in 2030 and therefore no cost and value calculations.
isolate the benefits attributable to policy cooperation. The four advanced offshore hubs are also included in these scenarios. Hence, we label them GPC (grid and policy cooperation) scenarios.
As a consequence of regional cooperation on offshore wind power deployment, the offshore wind farms that are developed are located at the sites with the highest market value relative to electricity generation costs. In the policy cooperation scenarios, it is also possible to utilise offshore wind power sites located at the hubs more efficiently than in the GC scenarios. Figure 5-20 below shows how the distribution of offshore wind power capacity throughout the region shifts between the GPC and GC scenarios.
Figure 5-20 Geographical location of offshore wind power in the Baltic Sea Region in the Low offshore wind power cooperation scenarios (top) and the Ambitious offshore wind power cooperation scenarios (bottom).
Looking at the 2030 results for the Low GPC and Low GC scenario, we can see that introducing regional policy cooperation implies developing less offshore wind power capacity in
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Low GC Low GPC Low GC Low GPC
2030 2050
Finland Sweden Estonia Latvia Lithuania Denmark Germany Poland
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Ambitious GC Ambitous GPC Ambitious GC Ambitous GPC
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Finland Sweden Estonia Latvia Lithuania Denmark Germany Poland
Poland and more in Denmark, which has the sites with the lowest generation costs and still provides for fairly high market values.
Moving across to the 2050 results, we can see that the share of wind power in Poland increases and ends up higher under the GPC scenario, which in its first phase until 2030 has seen Poland‘s share in deployment reduced. By 2050, power prices – and thus the market value of offshore wind power – differ significantly across the region and this significantly affects the location of offshore wind power in the regional policy cooperation scenario. In particular, we see high electricity prices in Poland (75-80 €/MWh) attracting a large share of total offshore wind power investment.
The relocation of offshore wind power capacity to Denmark and Poland is also apparent in the ambitious grid and policy cooperation scenario (Figure 5-20, bottom).
As regards the Baltic countries, which currently have no or little offshore wind power capacity, offshore wind power development only takes place beyond 2030 in the Low offshore wind power scenarios.34 In the Ambitious scenarios, offshore wind is established already by 2030.
More efficient distribution of offshore wind power capacity in the Baltic Sea also enables more efficient development of other renewable generation, see Figure 5-21. In the Low GPC scenario, the changed distribution in the Baltic Sea results in less biomass and solar power generation in 2050, enabling increased amounts of onshore wind power and offshore wind power in the North Sea compared to the Low GC scenario (Figure 5-21, top). Similar effects are visible in the Ambitious GPC scenario, where redistribution of Baltic offshore wind power facilitates more cost-efficient RES-E deployment with increased amounts of onshore wind power, which in turn replaces biomass, (Non-Baltic-) offshore wind power and solar power (Figure 5-21, bottom). This illustrates that the deployment of offshore wind power in the Baltic Sea, the changed grid configuration (increased interconnector capacities via hubs), and the extent of cooperation on offshore wind power development has market implications that affect the rest of interconnected the system as well. This also demonstrates the merit of taking into account aggregated generation costs in the analysis of the Baltic offshore wind generation scenarios.
34 This reflects the current situation and the historical trend, which is corroborated up until 2020.
It does not however prejudice faster and more extensive deployment, such as that planned by Estonia.
Figure 5-21 Changes in power generation in the modelling area (see Figure 5-1 for included countries) for the Low GPC scenario compared to the Low GC scenario (top) and for the Ambitious GPC scenario compared to the Ambitious GC scenario (bottom)
Policy cooperation yields unambiguous economic benefits amounting to a reduction of the aggregated system generation costs with respect to Baltic offshore wind power generation of between 5 and 9 €/MWh in 2050 compared to the grid cooperation scenarios alone (see Figure 5-22). The absolute savings amount to around 650 million € in the low deployment scenario and around 700 million € in the ambitious scenario. In general, allowing the model to select the best sites regionally will always be at least as efficient, and as demonstrated by the results, probably more so, than forcing the model to meet a series of national deployment targets, even where it selects the best national sites available.
-30 -20 -10 0 10 20 30
2020 2030 2050
TWh
Generation changes in Low GPC scenario
compared to Low GC scenario Solar
Offshore wind - Baltic Offshore wind - Other Onshore wind Hydro Other RE Biomass Waste Other fossil Natural gas Coal Nuclear Sum
-25 -20 -15 -10 -5 0 5 10 15 20 25
2020 2030 2050
TWh
Generation changes in Ambitious GPC scenario
compared to Ambitious GC scenario Solar
Offshore wind - Baltic Offshore wind - Other Onshore wind Hydro Other RE Biomass Waste Other fossil Natural gas Coal Nuclear Sum
Figure 5-22 Changes in aggregated generation costs* for the Low GPC scenario compared to the Low GC scenario (top) and the Ambitious GPC scenario compared to the Ambitious NP scenario (bottom). Shown as €/MWh of additional offshore wind power.