ISLES II Towards Implementation Business Plan and Network - - PowerPoint PPT Presentation

Irish Scottish Links on Energy Study ISLES II – Towards Implementation

Business Plan and Network Regulation and Market Arrangements workshop March 2015

BUSINESS PLAN: INTRODUCTION TO BARINGA PARTNERS ENERGY ADVISORY

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BUSINESS PLAN: INTRODUCTION TO SOURCE LOW CARBON

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NETWORK REGULATION AND MARKET ALIGNMENT STUDY: PÖYRY MANAGEMENT CONSULTING

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INTRODUCTION

INTRODUCTION: ISLES

• ISLES: IRISH SCOTTISH LINKS ON ENERGY STUDY
• There are opportunities for the coordinated development of marine renewable

energy projects and offshore electricity networks in the ISLES zone

• Regulatory and market barriers exist that restrict efficient development on a coordinated

basis

• ISLES is an initiative to facilitate this coordination - to enhance integration of marine

and offshore renewable energy between the three ISLES project partner counties (Scotland, Ireland, Northern Ireland) and with the wider UK,

• ISLES is not a project in itself: the vision will be realised by the combined efforts of market

participants

• Key themes:
• Offshore renewable energy
• Network coordination
• Interconnection
• Project of Common Interest:
• Contribute to market integration
• Improve security of supply
• Reduce CO2 emissions

INTRODUCTION: ISLES II

• Three ISLES II Work Streams

1. Business Plan 2. Network Regulation and Market Alignment Study 3. Spatial Plan and Sustainability

• ISLES I: Vision for Delivery - April 2012
• ISLES II: ‘Towards Implementation’ – concluding summer 2015
• Aims to identify and seek to address the barriers to coordinated generation and

network development

INTRODUCTION: OBJECTIVES OF TODAY

• Workshop Part 1:Network Regulation and Market Alignment Study
• Workshop Part 2: Business Plan
• Workshop Part 3: Round table discussions:
• 2 sessions

Objectives

• Identify the regulatory, market and other barriers exist that restrict efficient

development on a coordinated basis,

• Discuss the context and framing of the opportunities in the ISLES zone, and

key messages for the ISLES Business Plan

• Review of options for NRAMAS work stream
• Get input from a wide, well-informed group of stakeholders

High level agenda

CONTEXT

ISLES I: VISION FOR DELIVERY

• Offshore integrated network economically

viable, potentially able to deliver a range of wider economic, environmental and market related benefits

• 16GW maximum resource potential
• No technological barriers
• Sufficient onshore network capacity
• No significant adverse environmental

constraints that can’t be adequately mitigated

• Potential benefits from an coordinated network

development:

• Levelised cost reductions for generation

projects, improving project economics relative to non-integrated solutions

• Development efficiencies (e.g.

consenting)

• However, ISLES I also identified complexities associated with establishing a

cross-jurisdictional framework in the region

• Key areas identified:
• Low carbon support/subsidy arrangements
• Anticipatory investment issues and need for approach for coordinated
• ffshore build
• Network classification and implications for regulatory treatment
• Transmission charging – equitable, affordable

ISLES I: VISION FOR DELIVERY

• ISLES II: three work streams to tackle some of the barriers to coordinated

development

• Regulatory and market barriers exist that restrict efficient development on a

coordinated basis, e.g.

• jurisdictional boundaries
• absence of mechanisms to ensure development decisions appropriately take

into account costs and benefits external to an individual project, including

• ptionality for future developments
• The ISLES II Network Regulation and Market Alignment Study (NRAMAS) is

exploring options to address these barriers:

• Mix of benefits, costs and risks from coordination will depend on the circumstances
• f each project, jurisdiction
• One size does not necessarily fit all: flexibility in regulatory and market arrangements

rather than prescriptive over who should incur cost/risk

ISLES II: TOWARDS IMPLEMENTATION

BUSINESS PLAN INTRODUCTION

• ISLES II Business Plan
• An information document about the ISLES opportunity, presenting and building on

conclusions of the ISLES II work performed to date

• A viable plan of action for key stakeholders
• 2020-2030 timeframe for development
• Use of worked examples
• Key stakeholders for the Business Plan
• Governments (host and customer)
• Regulators, planning authorities
• Project developers
• European institutions
• Supply Chain
• Objective for today: to introduce key issues, principles and get feedback about the

challenges and opportunities

BUSINESS PLAN CONTEXT: POLICY DRIVERS

European Energy Union: Commission Communication (25th February 2015)

• Successor to the Third Energy Package of energy legislation
• Continuation of policies, deepening objectives.
• Energy Flows: “Fifth Freedom”
• Five dimensions
• energy security, solidarity;
• a fully integrated European energy market;
• energy efficiency
• decarbonising the economy;
• research, innovation and competitiveness.
• Lack of interconnection highlighted as major obstacle. Need for major infrastructure

projects, driven by private sector. Annual reporting on interconnection National policies/targets

• more of a moving feast – elections, revisions to strategies, changing regulatory

context

BUSINESS PLAN CONTEXT: REGULATORY CONSTRAINTS

Competitive Allocation of Support for Renewables

• Introduced across Europe from 2017
• Impacts on:
• Appetite for development risk – high upfront cost of offshore development
• Ability/willingness for generation developers to coordinate
• UK Electricity Market Reform: competitive support, limited budget for offshore wind
• International CfD: no commitment to principle ahead of election
• NI CfD: Work still ongoing

State Aid

• Any selective advancement of a particular beneficiary through the provision of state

resources or some other economic advantage

• Consistency with domestic policies and European frameworks will be maintained

• Project landscape has changed

significantly since ISLES I:

• (Map: Nov 2012, The Crown Estate)
• Offshore wind projects in northern ISLES

zone (Scotland, NI) have fallen away

• Wider context of project attrition in UK,

limited progress in Irish waters

• Important given the increased development

risk now facing developers

• New site awarded in Isle of Man waters

CONTEXT: CHANGES SINCE ISLES I

THEMES FOR ISLES II

• In light of the current context, ISLES partners are supportive, but expectations are realistic.
• Commitments to adopt recommendations vary across jurisdictions
• Therefore the work streams are focusing on practical next steps that key stakeholders can

take, and will see benefits in taking, to enable progress in the ISLES zone

• Our Business plan is going to be more focused on promoting offshore generation in the

ISLES zone as something that is credible and beneficial so that governments(customers) and potential investors can get behind it.

• We will seek to build on the NRAMAS work to consider solutions to a number of the issues

standing in the way and promote coordinated development.

• We are also very interested in the wider principles: the big issues that need to be

grappled with at EU level:

• In particular the tension between objectives of market integration and competitive

allocation of support – how to enable cross-border coordination?

NETWORK REGULATION AND MARKET ALIGNMENT STUDY

CHALLENGE: REGULATORY BARRIERS TO COORDINATION OF GENERATION AND NETWORKS

• There are opportunities for the coordinated development of marine renewable

energy resources and offshore electricity networks in the ISLES zone

• Regulatory and market barriers exist to the efficient development of these

resources on a coordinated basis, e.g.

• jurisdictional boundaries
• absence of mechanisms to ensure development decisions appropriately

take into account costs and benefits external to an individual project, including optionality for future developments

• The ISLES II Network Regulation and Market Alignment Study (NRAMAS) is

exploring options to address these barriers to efficient coordination of

• ffshore generation and networks in the ISLES zone
• Development
• Operation
• Ownership
• Ongoing revenue and responsibilities

20

AIM: REGULATORY FRAMEWORK SHOULD DELIVER THE RIGHT INCENTIVES TO THE RIGHT PARTIES

21

• There is not an universal set of

drivers of a coordinated approach

Context

• Approaches explore whether

incentives to coordinate sit best centrally or privately

Principles

• Efficient incentive design is

important but not sufficient for practical implementation

Toward implementation

CONTEXT:

There is not an universal set of drivers of a coordinated approach

22

CONTEXT: COORDINATION SHOULD BE INCENTIVISED WHEN IT IS AN EFFICIENT APPROACH

Coordinated development of offshore generation and networks can lead to:

23

Direct benefits for the delivery of a project Wider (monetised) energy sector benefits Support for wider policy goals But coordination can also lead to negative factors in all of these areas; e.g. increased project risk rising from greater complexity

CONTEXT: IDENTIFYING THE MOST EFFICIENT APPROACH TO DEVELOPING ASSETS IS NOT SIMPLE

24

• Mix of benefits, costs and risks from coordination will depend on the circumstances of

each project

• Hence, regulatory and market arrangements must be flexible rather than overly

prescriptive over which parties should face the incentives for coordination Direct benefits for the delivery of a project

• Lower offshore

network capex

• Increased reliability
• Lower cost funding

Wider (monetised) energy sector benefits

• Market to market

capacity

• Onshore

transmission benefits

• Optionality for future

generation development Support for wider policy goals

• More integrated

European electricity market

• Supply chain
• New generation

technologies

• Environmental goals

PRINCIPLES

Approaches explore whether incentives to coordinate sit best centrally or privately

25

PRINCIPLES: WE FOCUS ON 3 MAIN QUESTIONS FOR COORDINATION OF GENERATION AND NETWORKS

26

‘Centrally-driven

coordination’

‘Developer-driven

coordination’

• 1. What are the arrangements for developing ‘shared’ offshore networks?

‘Regulated’ ‘Merchant’ More risk borne centrally More risk borne by private projects

• 2. How can ‘shared’ offshore network capacity be released to other users?
• 3. What is role of governments in award of cross-jurisdictional RES support ?

PRINCIPLES: NETWORK DEVELOPMENT

27

‘Centrally-driven

coordination’

‘Developer-driven

coordination’

• 1. What are the arrangements for developing ‘shared’ offshore networks?

‘Regulated’ ‘Merchant’ More risk borne centrally More risk borne by private projects

NETWORK DEVELOPMENT: RISK ALLOCATION KEY IN COORDINATED NETWORK DEVELOPMENT

• Shared offshore networks have multiple uses, such as:
• transfer capacity for (multiple) directly connected generation;
• market to market capacity
• nshore transmission capacity
• Arrangements for coordinated network build should appropriately incentivise

delivery of capacity for future uncertain uses (i.e. anticipatory investment)

• In ISLES II, we focus on the differences between two approaches in the

management of risk of coordinated network development

• effective risk management vital in delivering cost-competitive individual

projects,

• reflects ‘track record’ of individual projects seeking to retain control of

development of dedicated network assets

28

NETWORK DEVELOPMENT: THE TWO APPROACHES DIFFER IN ALLOCATION OF RISK OF COORDINATION

29

‘Centrally-driven

coordination’

‘Developer-driven

coordination’

• 1. What are the arrangements for developing ‘shared’ offshore networks?

‘Regulated’ ‘Merchant’ More risk borne centrally More risk borne by private projects Individual projects shielded from exposure to risk of coordinated network development Individual projects bear some risk of coordinated network development

• We have focused on risk management rather than detailed cost allocation

methodology for committed uses

• risk management approach should inform cost allocation methodology
• cost allocation methodology will then determine the jurisdictional

allocation of cost for each offshore network development

NETWORK DEVELOPMENT: SOME BIG QUESTIONS FOR THE PRACTICAL APPLICATION OF PRINCIPLES

• How allocate risk of ‘accidental’ anticipatory investment?
• Importance of ‘certainty’ of network cost forecast during development

process – e.g. RES bidding into competitive allocation process; interconnectors applying for (partly)-regulated revenue framework

• How strongly should benefits for using coordinated networks be linked

to allocation of risk of developing them?

• If a private project is not bearing any of the risk of coordinated network

development, should it enjoy the full reduction in network capex (e.g. from economies of scale)?

• If ‘spare capacity’ fully utilised, should there be a surplus/profit for the

party underwriting that spare capacity?

• How might ‘privately-borne risk’ best be allocated between

generation and network projects?

30

PRINCIPLES: NETWORK SHARING

31

‘Centrally-driven

coordination’

‘Developer-driven

coordination’ ‘Regulated’ ‘Merchant’ More risk borne centrally More risk borne by private projects

• 2. How can ‘shared’ offshore network capacity be released to other users?

NETWORK SHARING: SHARING BY DIFFERENT USERS CAN INCREASE NETWORK UTILISATION

32

 Example: 2GW of offshore wind with

2GW export link to onshore system

 Opportunities for network sharing

– Offshore wind needs 41% of the network transfer capacity on average – In 75% of hours, at least 500MW of transfer capacity available for other uses –

NETWORK SHARING: APPROACHES DIFFER IN WHO BEARS RISK AND REWARD OF CAPACITY RELEASE

33

‘Centrally-driven

coordination’

‘Developer-driven

coordination’

• 2. How can ‘shared’ offshore network capacity be released to other users?

‘Regulated’ ‘Merchant’ More risk borne centrally More risk borne by private projects TSO of shared offshore network responsible for releasing firm capacity to

• ther users

Projects ‘sell’ short-term firm capacity on shared offshore network to other users

• Forecast errors make it hard to measure the ‘optimality‘ of capacity release
• Long-term incentives important where additional network investment required

to facilitate network sharing

NETWORK SHARING: EXAMPLE OF GENERATION AND INTERCONNECTION SHARING CAPACITY

34

2GW of offshore wind with 2GW export link to

• nshore system

(System A) 500MW link built to another

• nshore

system (System B)

NETWORK SHARING: APPROACHES DIFFER IN IMPACT OF CAPACITY RELEASE ON OTHER USERS

35

2000MW 500MW TSO releases 500MW capacity for market to market flows 2000MW Capacity Generation project ‘sells’ 500MW firm capacity to market to market flows Non-firm capacity for market to market Non-firm capacity for generation Firm capacity for generation Firm capacity for market to market

‘Centrally-driven

coordination’

‘Developer-driven

coordination’

2000MW 1500MW 500MW 500MW 2000MW 500MW 500MW

2000MW = total export capacity to system A

Capacity

PRINCIPLES: RES FUNDING

36

‘Centrally-driven

coordination’

‘Developer-driven

coordination’ ‘Regulated’ ‘Merchant’ More risk borne centrally More risk borne by private projects

• 3. What is role of governments in award of cross-jurisdictional RES support ?

RES FUNDING: APPROACHES DIFFER IN HOW ADDRESS JURISDICTIONAL BARRIERS TO FUNDING

37

‘Centrally-driven

coordination’

‘Developer-driven

coordination’

• 3. What is role of governments in award of cross-jurisdictional RES support ?

‘Regulated’ ‘Merchant’ More risk borne centrally More risk borne by private projects Cross-jurisdictional support delivered through specific joint intiative agreed between Governments Individual projects compete directly in support schemes with projects in customer jurisdiction(s)

• RES funding will cover the ‘value of the renewable energy’, not necessarily all

the project costs

• Can wider benefits be captured to make RES delivery more cost-

competitive for an individual project basis?

TOWARDS IMPLEMENTATION

Efficient incentive design is not enough for practical implementation

38

PRINCIPLES: WE FOCUS ON EFFICIENT INCENTIVE DESIGN FOR COORDINATED DEVELOPMENT

39

‘Centrally-driven

coordination’

‘Developer-driven

coordination’

• 1. What are the arrangements for developing ‘shared’ offshore networks?

‘Regulated’ ‘Merchant’ More risk borne centrally More risk borne by private projects

• 2. How can ‘shared’ offshore network capacity be released to other users?
• 3. What is role of governments in award of cross-jurisdictional RES support ?

Cross-jurisdictional support delivered through specific joint project arrangements agreed between Govts Individual projects compete directly in support schemes with projects in customer jurisdiction(s) Cross-jurisdictional support delivered through specific joint project arrangements agreed between Govts Individual projects compete directly in support schemes with projects in customer jurisdiction(s) Cross-jurisdictional support delivered through specific joint intiative agreed between Governments TSO of shared offshore network responsible for releasing firm capacity to

• ther users

Individual projects shielded from exposure to risk of coordinated network development Projects ‘sell’ short-term firm capacity on shared offshore network to other users Individual projects bear some risk of coordinated network development

IMPLEMENTATION: INCENTIVE DESIGN ONLY ONE PART OF DELIVERING PRACTICAL ARRANGEMENTS

• Drivers of coordination will vary between different generation and

network developments

• cannot have a single universal approach to coordination, based on a

presumption of a universal cost allocation

• Regulated and merchant approaches are not mutually exclusive
• possibility to mix and match approaches to best fit circumstances
• flexibility may come at risk of increased complexity
• Workable arrangement to support near-term developments unlikely to

fit neatly in the existing legal frameworks

• regulatory framework for an asset should ideally follow function rather

than strict legal definition (jurisdictional and/or European)

• respect existing jurisdictional boundaries
• relies on further cross-jurisdictional cooperation between policy-makers
• workable arrangements made easier to implement where consistent with

existing policy initiatives, as far as possible (even if those initiatives may not be consistent with idealised long-term visions)

40

MAIN MESSAGES

41

AIM: REGULATORY FRAMEWORK SHOULD DELIVER THE RIGHT INCENTIVES TO THE RIGHT PARTIES

42

• There is not an universal set of

drivers of a coordinated approach

Context

• Approaches explore whether

incentives to coordinate sit best centrally or privately

Principles

• Efficient incentive design is

important but not sufficient for practical implementation

Toward implementation

BUSINESS PLAN

BUSINESS PLAN INTRODUCTION

• What is the ISLES II Business Plan?
• An information document about the ISLES opportunity, presenting the

conclusions of the work performed to date, and

• A viable plan of action for key stakeholders to take to enable delivery of

infrastructure in the region

• Use of worked examples
• Who are the key stakeholders for the Business Plan?
• Governments (host and customer),
• Regulators
• Planning authorities
• Project developers
• Supply chain and
• European institutions
• Not a business plan in the conventional sense:
• Customer ambiguity
• Unable to assume adoption of all recommendations

• To account for the changes observed since ISLES I, the consultants have agreed with

the Government partners to adopt the following approach:

• Highlight the implications of recent changes for developers/investors in the ISLES zone
• Importantly, while resource potential, technology availability are probably not

constraints to development in the region, they are not in themselves sufficient to deliver projects

• Focus on drivers for demand and regulatory obstacles
• Timelines are post-2020
• Partners supportive, but expectations are realistic.
• Commitments to adopt recommendations vary across jurisdictions
• Therefore the work streams are focusing on practical next steps that key stakeholders

can take to enable delivery in the ISLES zone

• Consider issues in a wider context: application of principles further afield where

similar opportunities and challenges are arising

CONTEXT: APPROACH FOR ISLES II

BUSINESS PLAN: STATUS

Current state of play/ identifying constraints on messaging Gather stakeholder feedback on presenting the

• pportunity

Business Plan drafting and publication

• Reviewed changes

since ISLES I

• Meetings with DECC,

Crown Estate and

• ther key stakeholders
• n scope
• Agreed approach with

Partner Governments

• Stakeholder events in

London and Belfast

• Supplier events in Glasgow,

Belfast and Dublin

• Bilateral meetings
• Ongoing engagement with

anchor projects

• Publication due for summer

2015

BUSINESS PLAN: CONTENT

Policy drivers and rationale for ISLES Updated overview of viable development

• pportunities including spatial plan work

Description of anchor projects and opportunities for coordination Challenges to implementation Overview of NRAMAS options Delivery strategy including application of NRAMAS options Supply chain opportunities Recommended next steps

BUSINESS PLAN: PRINCIPLES UNDERPINNING MAIN CONTENT

Policy drivers and rationale for ISLES Updated overview of viable development

• pportunities including spatial plan work

Description of anchor projects and opportunities for coordination Challenges to implementation Overview of NRAMAS options Delivery strategy including application of NRAMAS options Supply chain opportunities Recommended next steps

• Some key principles will underpin the

remaining content of the Business Plan

• Developed with key stakeholders and upon

reviewing the current status of ISLES projects:

1.

A specific “customer” jurisdiction for ISLES projects cannot be assumed

2.

Consistency with domestic policies and European frameworks will be maintained

3.

Next steps will be identified, but some challenges remain outside of ISLES’ capabilities

4.

Concepts will be demonstrated around “anchor projects”

BUSINESS PLAN: PRINCIPLES: CUSTOMER FOR ISLES ENERGY

Customer identification

Potential demand for renewables post-2020? Further demand for interconnection?

• Customer jurisdiction(s) for each

potential ISLES project needs to be identified and have their eligibility agreed to secure support and regulatory regime (not an issue for projects targeting their domestic regimes)

• Identifying a “customer” jurisdiction(s) is key for

developing infrastructure projects

• Buy-in from customer is required to drive necessary

changes – primarily to market and regulatory arrangements

• However, steer from policy makers that no one

customer country should be assumed

• Pre-empts national decisions
• Limits how specific we can be about demand

and ultimately source of funds/subsidy

• Therefore:
• Business Plan will put forward principles of

coordination, but not be specific on country/ies or support instruments

• Principles should be relevant to multi-jurisdictional
• pportunities across Europe

Cost

• Lower cost than

marginal domestic alternative

Industrial benefits

• Supporting

development of an industry in customer jurisdiction

• Jobs
• Specific

community benefits

Fit with domestic needs/political

• bjectives
• Scale, timing and

nature of generation needs to be compatible with host country’s economic need and political acceptability

Credibility

• Meeting the same

(or better) pre- requisites and eligibility criteria as existing generation

• Principles for gaining buy-in from customer jurisdictions will be outlined
• Precedents include: Hinkley C, Swansea Tidal Lagoon, and to an extent the Scottish Isles

have all received political support which has then spurred Government work streams

• Drivers of political buy-in have included the one or more of the following:

BUSINESS PLAN: PRINCIPLES: CUSTOMER AND GAINING BUY-IN

BUSINESS PLAN: PRINCIPLES - CONSISTENCY WITH EUROPEAN AND NATIONAL POLICY FRAMEWORKS

• Suggested next steps will be consistent with direction of travel in Europe and

within the ISLES region – in particular: In Europe:

• Competitive Allocation of Support
• Tenders to grant support to all new installations from 2017
• Generators will need to sell their electricity in the market.
• Impacts on:
• Appetite for development risk
• Ability/willingness for generation developers to coordinate
• State aid: Any selective advancement of a particular beneficiary through the provision of

state resources or some other economic advantage

BUSINESS PLAN: PRINCIPLES - CONSISTENCY WITH EUROPEAN AND NATIONAL POLICY FRAMEWORKS

• Nationally:
• Challenge is to develop principles that do not cut across existing (different) policies

Jurisdiction Low carbon support Interconnection Transmission regulation Market arrangements GB CfD Cap and floor/merchant OFTO GB BETTA arrangements Northern Ireland CfD (NI?) Fully regulated/other? Not yet designed I-SEM Ireland REFiT replacement Fully regulated/other? Not yet designed I-SEM

ISLES I ISLES II Application of ISLES to anchor projects

BUSINESS PLAN: PRINCIPLES - NEXT PHASES OF ISLES

• Set out vision for

the ISLES projects

• Overall benefits
• Scale
• Cost
• High level

deliverability

• Principles for
• ffshore network

funding and access

• Principles for

project revenue streams

• Principles of

customer demand

• Opportunities for

supply chain

• Project level:
• Identify “Customer jurisdiction(s)”
• Finalise project offering (e.g. renewable

energy, interconnection or both to deliver at a price)

• ISLES partners:
• Support anchor projects
• Detailed regime design and

implementation around anchor projects that come forward

• Given the lack of an identified customer, the Business Plan will outline where further

implementation work will be needed, and the potential for further barriers to be uncovered

INTRODUCING ANCHOR PROJECTS

• We will use anchor projects to frame the opportunity for coordination

presented by “live” projects in the ISLES zone

• Advanced stage of development:
• relatively near term: project development lead times
• Importance of development risk under competitive allocation
• Commercially viable: likely to be competitive
• Customer identified

Scotland Northern Ireland Ireland Development status No projects under development No projects under development Consented projects LCOE Challenging sites – e.g. ground conditions Potentially competitive Potentially competitive (in different jurisdiction) Customer Identification Domestic demand exists Domestic CfD under review No domestic signal or firm international framework

• Potential asymmetries in timing of benefits across partner jurisdictions

BUSINESS PLAN: ANCHOR PROJECTS (2) – ISLES ZONE PROJECT LANDSCAPE

Generation-only projects Interconnector-only projects Multi-purpose projects

ISLES zone project landscape

• 2-3 reasonably advanced

projects

• Supportive of ISLES concept

subject to deliverability

• 1 project actively developing

in the ISLES region

• No involvement in ISLES to

date

• More of an option for

existing generation projects than a single project proposal

BUSINESS PLAN: ANCHOR PROJECTS (3) - IRELAND

• ORIEL

ORIEL WIND FARM Developer ORIEL Wind farm Ltd Potential Capacity 330MW Depth: 14-30m Distance to shore (Ireland) 22km (Dundalk) CODLING BANK Developer Fred Olsen Renewables Potential Capacity 1.1GW Depth: 9-16m Distance to shore (Ireland) 13km (Greystones, Wiklow)

• Two consented projects have agreed that the

Business Plan can use their projects as worked examples

BUSINESS PLAN: ANCHOR PROJECTS (4) – ILLUSTRATIVE COORDINATION OPPORTUNITIES

• Opportunities for coordination:
• Oriel (330MW)
• Too small for direct connection (to UK) but coordination could be possible with

larger projects in the vicinity, which could include:

• Shared links (i.e. oversized) and interconnection
• Offshore hub development
• Codling (1.1GW)
• Has capacity to justify direct connection to UK, and therefore could be incentivised

to coordinate in network design, which could include:

• Shared links (i.e. oversized) and interconnection
• Offshore hub development
• Note that suggestions for coordination will be illustrative in the Business Plan and will

not prejudice developers’ discretion in finalising the design of projects

INTRODUCING ANCHOR PROJECTS

Scotland and Northern Ireland:

• No offshore wind projects under active development.
• Site identification:
• ISLES spatial work
• Government’s marine renewable energy sectoral plans/marine plans
• Scotland: 500-600MW nominal offshore wind project
• Northern Ireland: Torr Head tidal project (100MW)

• We will assume an integrated

approach to development and construction for anchor projects

• Strong precedent for

deliverability

• CfD terms likely to increase

importance of managing interface risk:

• Evidence of substantial

commitment to investment within 1 year of contract signature

• Penalties for delay beyond

a target commissioning date.

Company A Company A Company B Company A Company B Company A Company B

Integrated approach to construction Disaggregated approach to construction

Interface risk

BUSINESS PLAN: ANCHOR PROJECTS (5) – INTEGRATED DEVELOPMENT ASSUMPTION

• Given the policy context and principles that we have outlined for the Business Plan:
• What specific messages should the Plan aim to outline for key stakeholders:
• Governments, regulators (e.g. support schemes, IGAs, level of engagement in

facilitating coordination)

• Developers (e.g. eligibility, commercial terms, coordination opportunities
• European stakeholders (e.g. 2030 legislation, CACM flexibility)
• What do you see as the main barriers to ISLES and to what extent can these be

mitigated through the actions of the ISLES host jurisdictions?

• What approach could be taken by a “customer jurisdiction” to allocate low

carbon support to ISLES projects?

ROUND TABLE DISCUSSION: YOUR INPUT TO THE ISLES BUSINESS PLAN