The first year of a new job always has a learning curve. But for Catrin Jung, who in December 2019 took over Swedish utility Vattenfall’s offshore wind business unit, it must have felt at times like mountain-climbing, with the clock ticking down on a final investment decision (FID) on the giant Hollandse Kust South (HKS) development off the Netherlands – the first zero-subsidy project off Europe – and the Covid-19 pandemic disrupting every aspect of normal daily operations.

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But Jung, who has worked at the developer since 2002 in roles including head of offshore wind market development, has taken it largely in stride.

“That taught me quite a bit about taking FIDs in a year like we have had with Covid and with the zero-subsidy [terms of the HKS development]. It was a tough one. Even if your long-term market outlooks are strong, you can still get hit by the pricing in the first years after [a project comes online] in such a [merchant] market,” she says.

Though the FID was secured in June for the 1.5GW project, which will dovetail together the HSK 1&2 awarded to the developer in 2018 and the adjacent HSK 3&4 won last year, the experience left Jung “a little wiser” about the longer term realities of a merchant market for offshore wind power.

“I learned zero-subsidy projects are possible as something in the ‘mix’ of a portfolio. But if we want to go for 300GW [in the northern seas] or 450GW at full Europe-wide scale, this will not come via zero-subsidy bids as you will not be able to get all the financing in place,” she says, referring to the recently targets set out as part of the European Commission’s new offshore energy strategy.

“With all the joy that comes with seeing the high ambition levels [in the European parliament], what we still see today are issues with permitting delays and delays to auctions. We are now prepared to expect every upcoming auction to be three-to-six months delayed.

Jung believes the upcoming tender off the UK, which will use a de facto zero-subsidy Contracts for Difference system, as “good so long as costs stay below expected power prices” and that in Germany, which was considering a second offshore auction round that would open the door to “negative” bids, as “problematic”, noting it “didn’t seem like a reasonable way to go, especially if we want to reach our cost targets”.

Back in the Netherlands, Vattenfall earlier this year in fact pulled out of a subsidy-free auction for the Hollandse Kust North zone, citing the uncertainty fomented by the Covid pandemic.

Offshore wind and H2 does make sense but I wish we wouldn’t talk about hydrogen as the ‘saviour’ but more the power-to-X idea

The confluence of slow-moving government action in awarding offshore wind zones at auction and the open-ended influence of Covid, Jung warns, is fast creating a bottleneck in project development timelines across Europe and the pressure building could impact the industry the length of its supply chain.

“We are pushing a large wave [of projects] in front of us, as an industry, toward 2030 in the first place, and I can see a lot of accumulation of developments [coming online] around this date. This will not make it easy for the supply chain or the developers – or the governments, of course, who could have an ‘over-competitive’ market to deal with [if this were to happen].”

Proactivity on the part of the offshore wind industry in “connecting and collaborating” will be crucial to evading this situation, says Jung, from projects on cross-national interconnectors and energy hubs through to consortium-based developer groups and collaborative work on ocean stakeholder management.

“I am happy that there is much more talk about maritime spatial planning. Many people are talking enthusiastically about energy islands and meshed grids and interconnectors but if you don’t have proper maritime spatial planning in place … .”

“And the wind farms we are building are not 200-300MW any more, they are 1GW or 1.5GW so you will need more partnerships among actors who ‘think bigger’,” she adds.

Producing green hydrogen from offshore wind independent of the power grid and exporting gas rather than electricity to shore is believed to one of the big potential wins of the energy transition, removing the need for electrical infrastructure that can add hugely to the complexity and cost of sea-based projects.

Shell and Gasunie recently unveiled plans for what is claimed to be Europe’s biggest green hydrogen project in the Netherlands, powered by up to 10GW of offshore wind in the North Sea, and the oil supermajor and utility Eneco in July won the latest zero-subsidy offshore wind tender held by the Dutch government, for the Hollandse Kust North zone, with a plan that linked-in a green hydrogen hub in the port of Rotterdam.

And a recent UK study went so far as to claim an offshore wind-led clean hydrogen boom could “match the best years of the North sea oil & gas sector” .

Though “excited as we all are by the potential” of marrying offshore wind and hydrogen production, Jung says industry and governments must start from a Power-to-X vantage point and look across all sectors through a CO2 emissions-reduction lens, “then take a macroeconomic view and decide [which industry] is the most meaningful to go and incentivise,” she says.

“When we talk of offshore wind and hydrogen – which does make sense to a very large extent as it would save us from having to transport all the power to [the load centres] and burden the grids in this way – I wish we wouldn’t talk about hydrogen as the ‘saviour’ but more the Power-to-X idea.”

A pace-setter in European offshore wind, Vattenfall has so far only dipped a toe in floating market via “quite intensive” technical due diligence of the sector and Jung continues to see bottom-fixed offshore wind as having “still so much to offer us before we move into deeper waters”.

“It has been a case where we want to gain more knowledge without take the lead role on a [floating wind] project,” says Jung. “We don’t have any pilot project experience and we are also not yet building up teams in our set-up that would start designing [floating arrays].

“We do see it as key to the European scope and as part of the post-2030 [market] kicking-off. But we don’t want to be distracted too much right now from our focus on bottom-fixed given the many opportunities we still see.”