Guidehouse provides qualitative and quantitative analysis of ‘Developer Build’ vs ‘TSO Build’ approach
In a new report for RTE and TenneT, Guidehouse compared different offshore electricity transmission asset development models. The energy experts performed a quantitative cost comparison and qualitative analysis of the two models applied in Europe: ‘Developer Build’ versus ‘Transmission System Operator [TSO] Build’.
In the ‘Developer Build’ model, commercial parties develop and operate the offshore transmission assets. In the ‘TSO Build’ approach, the offshore grid development and operation is mandated to the local TSO by the national government.
Most European offshore wind markets, with the exception of the United Kingdom, have transitioned from a ‘Developer Build’ to a ‘TSO Build’ model to de-risk wind farm development, allow for scale, standardisation, a steady roll-out and cost reduction. National governments have taken more control of offshore wind and grid developments, noting long-term societal benefits of a regulated system with a larger share of the risk and responsibility for the offshore grid allocated to the TSO.
While this reallocation of cost and risks and technology innovation have led to significant cost reduction for offshore wind across Europe, the cost reduction potential for the grid connection is limited as future wind farms will be much larger and placed further from shore. This makes the offshore grid development model an increasingly important element in the total cost of offshore wind electricity.
There are varying viewpoints on the (cost-)efficiency of the two offshore grid development models. This report compares the development models and provides a factual basis for discussions with governments, regulators, and the wind industry, based not only on cost assumptions but also on long-term societal benefits.
The cost comparison was limited to capital expenditure (CAPEX) input, as operational cost data from UK projects is not available. However, operational aspects have been included in the qualitative comparison of pros and cons for each development model. Next to the main comparison, the report also provides country factsheets with key facts and figures of the country specific offshore wind developments and grid connection models.
This first of a kind comparison has shown that a TSO build approach to offshore transmission asset development can be realised at lower cost levels than the developer build approach. Moreover, the longer-term (design, planning, commercial and operational) benefits compared to a developer build approach are likely to be significant in a context where large-scale and far offshore wind clusters will require innovative system integration solutions to keep cost levels down while maintaining security of supply.
Download the study.