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Comparison of policy instruments in the development process of offshore wind power in North Sea countries

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  • Hongyun Zhang
  • Michael G. Pollitt

Abstract

Offshore wind power has made remarkable strides over the past decade, establishing itself as a financially viable technology with substantial potential to drive the energy transition of North Sea countries. The energy crisis commencing in 2021 further underscored the critical role of offshore wind in attaining net zero climate (or climate neutrality) objectives, prompting North Sea countries to adopt comprehensive strategies, including a fundamental energy system overhaul centred around offshore wind. Consequently, these countries have set ambitious offshore wind installation targets for both 2030 and 2050. To assess the attainability of these targets, this paper conducts an extensive policy analysis of the eight nations surrounding the North Sea, focusing primarily on the development stage, a crucial determinant of project success. Notably, competitive tenders and Contract for Difference (CfD) mechanisms are becoming standard tools across the region, indicating a collective shift towards efficient subsidy frameworks. Historical data and disparities suggest the formidable challenges in achieving the 2030 and 2050 targets, with streamlining the approval process emerging as a top priority. The emergence of negative subsidies in conjunction with zero-bid scenarios is reshaping industry paradigms is significantly impacting offshore wind project economics.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Hongyun Zhang & Michael G. Pollitt, 2023. "Comparison of policy instruments in the development process of offshore wind power in North Sea countries," Working Papers EPRG2323, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
  • Handle: RePEc:enp:wpaper:eprg2323
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    References listed on IDEAS

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    1. Jansen, Malte & Beiter, Philipp & Riepin, Iegor & Müsgens, Felix & Guajardo-Fajardo, Victor Juarez & Staffell, Iain & Bulder, Bernard & Kitzing, Lena, 2022. "Policy choices and outcomes for offshore wind auctions globally," Energy Policy, Elsevier, vol. 167(C).
    2. Rentier, Gerrit & Lelieveldt, Herman & Kramer, Gert Jan, 2023. "Institutional constellations and policy instruments for offshore wind power around the North sea," Energy Policy, Elsevier, vol. 173(C).
    3. Snyder, Brian & Kaiser, Mark J., 2009. "Offshore wind power in the US: Regulatory issues and models for regulation," Energy Policy, Elsevier, vol. 37(11), pages 4442-4453, November.
    4. Malte Jansen & Philipp Beiter & Iegor Riepin & Felix Muesgens & Victor Juarez Guajardo-Fajardo & Iain Staffell & Bernard Bulder & Lena Kitzing, 2022. "Policy choices and outcomes for offshore wind auctions globally," Papers 2202.12548, arXiv.org, revised Apr 2022.
    5. Oscar Fitch-Roy, 2016. "An offshore wind union? Diversity and convergence in European offshore wind governance," Climate Policy, Taylor & Francis Journals, vol. 16(5), pages 586-605, July.
    6. Malte Jansen & Iain Staffell & Lena Kitzing & Sylvain Quoilin & Edwin Wiggelinkhuizen & Bernard Bulder & Iegor Riepin & Felix Müsgens, 2020. "Offshore wind competitiveness in mature markets without subsidy," Nature Energy, Nature, vol. 5(8), pages 614-622, August.
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    More about this item

    Keywords

    Offshore wind; Contract for Difference; North Sea;
    All these keywords.

    JEL classification:

    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water

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