The states bordering the North Sea want to further promote the cross-border expansion of wind farms in the water. Specifically, up to 15 gigawatts of generation capacity will be auctioned across Europe every year from 2031 to 2040. The energy ministers of Belgium, Denmark, France, Ireland, Luxembourg, the Netherlands, Norway and Great Britain as well as several heads of state and government signed corresponding declarations on Monday at the North Sea Summit in Hamburg. At the same time, the industry in Hamburg committed to reducing the electricity production costs of wind turbines by 30 percent by 2040, investing 9.5 billion euros in new production capacity in Europe over the next four years and creating 91,000 additional jobs.
In addition, the states want up to a third of the 300 gigawatts planned by 2050 to be planned and networked across borders in order to use space more efficiently and reduce costs. The background is that some states have more suitable land than they need to cover their needs. One example is the three gigawatt Bornholm Energy Island wind farm being built in Denmark, for which power lines to Germany are also to be built. For the first time, the costs of the project are to be divided according to the benefits for the respective energy systems.
“Nice response” to Trump comments
With the efforts in the North Sea, the countries involved also want to make themselves less dependent on fossil energy imports to Europe. Federal Minister of Economics Katherina Reiche (CDU) described the North Sea as a “key strategic area in Europe”. The aim is to develop the “largest energy hub in the world” there. According to estimates by European transmission system operators, it could cover 40 percent of Europe’s electricity needs by 2050. The summit is a “nice response” to the American president’s statements at the World Economic Forum in Davos last week, said Reiche. Donald Trump described states that rely on wind power as “losers” and portrayed the technology as the “biggest fraud in history”. Data shows that it is the cheapest technology for generating electricity in Germany, at least in terms of production costs.
However, the costs of construction and connection to the power grid have risen sharply in recent years due to inflation. In addition to the 37 gigawatts installed at sea in Europe so far, hardly any new wind turbines were added last year. Reiche announced on Monday in Hamburg that the funding, in which interested parties have previously bid for the lowest possible amounts, will be switched to contracts for difference “in a timely manner”. Great Britain has shown that auctions can be successful. A few days ago, areas for the construction of up to 8.4 gigawatts of installed capacity were successfully auctioned there; it was the largest tender ever in Europe.
In Germany, however, not a single bidder was found in the last auction in the summer of last year. By switching to contracts for differences, Reiche is meeting long-standing demands from the industry, which expect the model to provide more investment security and thus lower financing costs. At the same time, the Energy Minister wants operators of wind farms to continue to be able to sell electricity directly to large customers.
The most important result of the summit is that the industry will have more predictability through the promised tenders from 2031, said the CEO of the wind farm project developer Ørsted, Rasmus Errboe, in an interview with the FAZ. This will make it much easier for the industry to invest more in production capacities in Europe and reduce costs. The industry associations BDEW and BWO also hope for a lot from cross-border planning. In this way, shading effects could be significantly reduced, full load hours and yields could be increased by six to 13 percent and the costs per megawatt hour could be reduced by six to eleven percent. The summit in Hamburg was the third of its kind, following meetings in 2022 in Esbjerg, Denmark, and 2023 in Ostend, Belgium.
