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Spain fires starting gun for offshore wind, but without clarity on auctions

22 December 2021 Cristina Brooks

Spain announced plans to build an offshore wind sector from scratch, depending on test-phase floating wind technology to overcome geographic limits.

Spain's executive body, the Council of Ministers, approved the Roadmap for Offshore Wind and Marine Energy, which will see the country research, develop, and build 1 to 3 GW of floating offshore wind power alongside 40-60 MW of wave energy by 2030, jockeying to lead these emerging sectors in in Europe.

Spain already plans to reach 50 GW of installed wind power through its National Integrated Energy and Climate Plan (PNIEC), which was required by the EU to help meet the bloc's Paris-Agreement-aligned 2030 emissions goal, but the new roadmap also sets a target for offshore energy.

Spain is one of Europe's hotspots for renewable energy generation with 2.6 GW of solar and 25.7 GW of wind power capacity installed, but it has no commercial-scale offshore wind capacity thanks to its deep Mediterranean waters and seabeds that are unfriendly to fixed-bottom offshore wind.

That means Spain-based wind turbine manufacturers have not installed any offshore wind power domestically, despite supplying both onshore and offshore wind farms across Europe and the globe.

To fix this, Spain will create a regulatory framework for offshore wind energy remuneration, administration, maritime spatial planning, and grid connections. The framework will align with the PNIEC and its law on energy decarbonization, which ensures auctions will be used to reach a target of least 70% of power from renewables by 2030.

Spain will add more renewables into its energy mix by using floating offshore wind power to run ports and desalination plants, among other things.

The country will also allocate €200 million ($226 million) to fund the roadmap's goals by the end of 2023, using EU funds, green bonds, and national funds managed by two state-run innovation bodies.

Spain expects several EU financial instruments can support development of offshore energy projects, including the Next Generation EU program that contains the €800 billion ($960 billion) Recovery and Resilience Facility (RRF), the Horizon 2020 innovation fund, the European Regional Development Fund (ERDF), the InnovFin Energy Demonstration Projects, and the InvestEU program.

The state has already requested €69.5 billion ($78.74 billion) in grants from the EU's RFF, a package of pandemic recovery grants and loans that comes with a duty to spend funds on the energy transition.

Spain seems set to target both decarbonization and economic growth with this roadmap, said IHS Markit Senior Research Analyst Diego Ortiz Garcia. "They are using these recovery funds to boost an industry where they are already leaders, and they want to remain leaders in the future. This is also an industry that helps them decarbonize their economy. It's a win-win for them because they're already experts in this field," he told Net-Zero Business Daily.

Trade association WindEurope welcomed the roadmap's renumeration system and proposed framework but criticized its failure to bring "visibility on future auctions for commercial-scale offshore wind projects."

Manufacturer, developer prospects

The global wind industry had a banner year in 2020 amid a surge in state tenders, according to the Global Wind Energy Council, a trade association. As global competition ratchets up, EU's executive body announced it was imposing tariffs on some Chinese imports to help protect EU manufactured wind towers last week.

In addition to Spain's thriving wind turbine manufacturing sector, there are wind turbine manufacturing hubs scattered across Europe in Denmark, Germany, and the UK.

But Spain's existing wind turbine manufacturing supply chain and available ports give it an advantage in Europe. "The difference with Spain is that it has every part of the supply chain needed. Other countries specialize in certain parts of wind turbines, while Spain manufactures all the different parts. For example, Germany has a lot of blade manufacturing, but they have less manufacturing of other parts," said Garcia.

One of the roadmap's main aims is to advance Spain's offshore wind manufacturing sector. It seeks to establish Spain as an R&D hub for floating wind and to generate jobs in the entire floating wind value chain, including logistics. Existing wind turbine manufacturers with production sites in Spain include German-Spanish engineering company Siemens Gamesa and German-Danish-Spanish wind turbine manufacturer Nordex Acciona.

The Spanish government used the roadmap to highlight existing R&D facilities for floating wind power and other marine energies, such as the Canary Islands Ocean Platform and the Vizcaya Marine Energy Platform as well as the Experimental Energy Harvesting Zone marinas of Punta Langosteira, a test bed for wave energy.

Spain also has encouraging market conditions for offshore wind. "It is a very good wind market because its Levelized Costs of Energy (LCOEs) [for different technologies] in general are very cheap. There's a good wind resource for onshore wind, and it's also expected that will be the case for offshore winds not only in Spain but also in [its autonomous territory] the Canary Islands," said Garcia.

In February, Spanish developer and utility Iberdrola announced it was seeking EU RRF funding for 300 MW of floating offshore wind capacity and an industrial hub. It also foresees building "up to" 2 GW of floating offshore wind off the coasts of Galicia, Andalusia, and the Canary Islands.

Iberdrola already has about 1.3 GW of offshore wind capacity in operation and is building another 2.6 GW. It is reportedly considering a spin-off similar to the renewable spin-off announced by Italian utility Eni in October.

Iberdrola is also investing in green hydrogen production. It calls its 20-MW Puertollano (Ciudad Real) plant "one of the largest electrolytic hydrogen production systems in the world."

IHS Markit's preliminary planning case for European power foresees some future demand for hydrogen being met by offshore wind in Spain. "Offshore wind is the technology that is most compatible with electrolyzers because it has the highest capacity factor, so it makes a lot of sense for the offshore wind industry to be developed in that country," said Garcia.

Floating offshore wind emerges

Floating wind technology is still under development. Only three prototype-scale floating wind farms are in operation today, but countries that need to make use of deeper waters to meet net-zero targets have launched the early stages of floating wind auctions.

This includes France, which pre-selected 10 candidates to bid to build a 250-MW floating offshore wind farm in September, and the UK, which picked a group of bidders for a seabed leasing round in the ScotWind tender in July.

Then, Italy's Ministry of Ecological Transition received Expressions of Interest for the development of floating wind farms in November.

Until tenders such as these make progress, fully-fledged floating wind farms are still some distance off.

The first prototypical floating wind farm, the 30-MW Hywind project off the coast of Scotland, started operations in 2017 as a joint venture of Norwegian state-owned company Equinor and Abu Dhabi's state-owned developer Masdar.

This was followed by the 25-MW WindFloat Atlantic project, which began operations off the coast of Portugal in 2020. Spain's Grupo Cobra pushed the button on the 50-MW Kincardine Offshore Floating Wind Farm in Scottish waters in October.

In Norway, Danish climate technology company Stiesdal this month began operations at its floating wind turbine demonstration project off the island of Karmøy. It plans to install two more floating wind turbines to reach a total capacity of 25 MW.

Stiesdal's project uses the Tetraspar floating wind turbine—an invention backed by energy giant Shell as well as utilities Tepco and RWE—which is intended to tackle the cost-prohibitive nature of manufacturing the large foundations needed for floating offshore wind.

Projects like these pale in comparison to those in development. WindEurope expects 7 GW of floating wind power will become operational by 2030, with floating wind projects now being developed in Norway, Italy, Greece, Portugal, the UK, Ireland, France, and Spain.

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