Offshore grid link costs rise

Costs for German offshore grid connections have risen since 2010, says a TenneT board member.

Germany’s offshore industry is struggling to bring down costs amid a public debate on power prices, but costs for grid connections have gone up in the past three years, says Wilfried Breuer, managing director of the transmission system operator's offshore projects.

“During this period, we had a significant, painful learning curve at many of the involved [companies],” Breuer said at a panel session during the Windforce offshore wind conference in Bremerhaven.

“It is clearly a market reaction. If you tender new grid connections now, then at first the risks are priced in to a higher degree [than] was the case in 2010.”

Breuer could not immediately say how much prices have gone up.

German offshore grid connections have suffered delays of a year or more. This is partly because TenneT’s financing for them was unclear, and partly because companies such as Siemens and their suppliers to which TenneT awarded the contracts needed more time than expected to build the links, due to the technical novelty of the complicated structures.

German projects are being built further out to sea than, for example, their UK counterparts, causing the need for expensive, complex converter platforms and high-voltage direct-current (HVDC) links to the coast.

While TenneT and suppliers had stipulated a period of 30 months to get the first grid links up and running, the industry now reckons construction times of 50 or even 60 months to be more realistic, Jörg Kuhbier, chairman of Germany’s Offshore Wind Energy Foundation, explained at the same panel.

To get rid of the risk premium, TenneT won’t award the future BorWin3 and BorWin4 grid links to a single company any more, as it did with previous grid links. Instead, it will tender alternating-current and DC cable systems, as well as converter platforms, separately, Breuer said.

Breuer also explained that with the €576m ($765m) financing deal reached with Mitsubishi earlier this year, TenneT is able to co-finance four out of eight grid connections that are in construction now.

“We’re carrying out further financing talks,” he said. “We feel very confident that further financing for the future can be secured.”

Kuhbier stressed that he has repeatedly advised the government to provide interim financing for offshore grid links via Germany’s KfW development bank, but so far to no avail.