Costs rising of Netherlands' grid expansion for North Sea wind farms: ministry - Reuters
Costs rising of Netherlands' grid expansion for North Sea wind farms: ministry | Reuters
Costs rising of Netherlands' grid expansion for North Sea wind farms: ministry
Wind turbines are seen in a wind park 23 km (14 miles) off the coast of Ijmuiden September 3, 2007. REUTERS/ Michael Kooren (NETHERLANDS)/File Photo Acquire Licensing Rights
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AMSTERDAM, Oct 17 (Reuters) - Costs have risen significantly in the past year for the Netherlands' multi-decade plan to connect its power grid to proposed North Sea wind farms due to rising interest rates, the country's Economic Affairs Ministry said on Tuesday.
The global offshore wind sector has seen huge cost increases due to inflation, slowing development in countries such as Britain and the United States and placing emissions-reduction goals in jeopardy.
Natural gas accounts for slightly more than half of the Netherlands' electricity generation, with most of the rest produced by renewable sources like wind and solar.
Under the Dutch system, private firms, such as Swedish-owned Vattenfall(VATN.UL), bid for concessions to build wind farms while the state ensures proper grid connections.
In a letter to parliament, Energy Minister Rob Jetten said that offshore grid costs from 2032 to 2057 will be 35.5 billion euros, instead of the 26 billion euros flagged last year, citing figures from electricity transmission system operator TenneT.
Rising interest rates as well as inflation and higher maintenance expenses are driving up the costs, Jetten said.
TenneT is fully owned by the Dutch government, but Germany is seeking to buy TenneT's large German operations to have greater say over crucial infrastructure for cutting the use of fossil fuels.
The Netherlands supports splitting TenneT, given its grid capital spending plans of more than 100 billion euros in the coming decade, which taxpayers of the two countries will ultimately bear.
Jetten said the Netherlands is on track for installing and connecting 4.5 gigawatts (GW) of offshore wind energy this year and 21 GW by 2030.
One gigawatt of electricity is enough to power a million Dutch households, though North Sea wind is irregular and often peaks at dawn and dusk.
Reporting by Toby Sterling; Editing by Rod Nickel
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Related Knowledge Center: Offshore wind energy
Over the next decade, U.S. offshore wind power is expected to grow from a single 30-megawatt wind farm off Rhode Island to more than 2,000 MW of capacity along the Atlantic Seaboard. There are contracts for wind power off the coasts of Massachusetts, Connecticut, New York, Maryland, New Jersey, Rhode Island, and Virginia.
The National Renewable Energy Laboratory has estimated the United States has over 4,000 gigawatts (GW) of offshore wind potential, enough to power the country four times over.
The growth in part being spurred by state solicitations, including in New York, where then-Gov. Andrew Cuomo (D) set a commitment of 9,000 MW of offshore wind by 2035, and in Connecticut, where in June 2021, Gov. Ned Lamont (D) signed legislation authorizing the construction of 2,000 MW of offshore wind by 2030.
The offshore development is also being driven by an investment tax credit set to end in December 2019 and is equal to 12 percent of expenditures. U.S. Sens. Susan Collins (R-Maine) and Tom Carper (D-Del.) have introduced a bill to extend the tax credit for up to eight years.
The Interior Department has held eight competitive lease sales that resulted in 15 offshore wind leases over 1.7 million acres that has the potential for 21 GW of capacity. In February 2022, the Bureau of Ocean Energy Management completed a bidding process that realized $4.37 billion for 488,000 acres across six lease areas in federal waters off New York and New Jersey.
Projects have also been proposed off the Southeast coast, off California and Hawaii, and for the Great Lakes.