Gabriela Ciontos, Devapriyo Das
29 November 2023
Energy islands: How do we make them cost-competitive?
Energy islands hold the promise of meeting the world’s growing demand for affordable, stable, and renewable energy. John Ammentorp, country market director for energy, explores ways to make energy islands cost-competitive and help move this groundbreaking concept from the drawing board to reality.
The concept of energy islands entered the spotlight when Denmark unveiled its ambitious net zero vision in the climate agreement for energy and industry in 2020. The plan outlined two energy islands, including an artificial island in the North Sea with a capacity of 3 GW that could be expanded to 10 GW.
Since then, the North Sea has captured the attention of nations looking to reshape the future of renewable energy production. European countries have settled on ambitious initiatives to harness the North Sea’s offshore wind potential and Belgium announced the construction of its own artificial energy island. The plan for the Danish North Sea energy island is maturing slowly as the initial concept is now being re-evaluated. As these projects take shape, attention turns to the broader context of energy islands and their profitability.
We asked John Ammentorp, country market director for Ramboll’s energy division in Denmark, about the prospects and challenges of making energy islands cost-competitive.
Why should countries invest in energy islands?
John Ammentorp: First, it’s about making energy affordable. Energy islands serve a strategic purpose, acting as near-shore environments as we explore areas farther away from the coast. By placing wind farms closer to the energy islands, we reduce complexity and cost, for example, by avoiding or minimising the need to lay down lengthy underwater cables to the mainland.
Secondly, it’s about flexibility and transporting energy where it’s needed the most. As more renewable energy is being deployed it is difficult to balance production and consumption. Energy islands can accumulate surplus energy during periods of abundance. When demand peaks, energy can be distributed where needed most urgently.
What are the main costs associated with developing and operating energy islands?
Developing and operating energy islands leads to costs across several dimensions. In terms of capital expenditures (CAPEX), we have costs related to the construction of the physical infrastructure, including the platform or artificial island, and the electrical infrastructure for power generation and transmission. Another dimension is operational costs, which depend on various factors including the specific design, technology used, geographic location, and the scale of the project.
Lastly, we have the technological development costs, such as high-voltage direct current (HV/DC) equipment and Power-to-X.
"Energy islands can accumulate surplus energy during periods of abundance. When demand peaks, energy can be distributed where needed most urgently."
What is needed to make energy islands cost-competitive?
Energy islands require huge investments. Their cost-competitiveness is dictated by risk reduction and diligent management of uncertainties. The key lies in developing standardised models that serve as the foundation for scalable solutions evolving in tandem with the market dynamics.
It’s important to adapt and leave space for integrating emerging technologies if the market suffers drastic changes. A modular approach keeps CAPEX costs under control and allows for adjustments to the project’s scope and scale. To achieve this, we need a strong supply chain and a shared understanding of how we make these projects viable.
Does the design or type of energy island influence the business case?
Yes. Depending on how ambitious the project is, there are several configurations to consider. In many cases, simplicity may be key, involving an energy hub with one or more platforms. There is the option of building an artificial island, which has potentially more advantages in terms of hosting substantial capacities and large-scale Power-to-X technologies for the production of e-fuels. However, the artificial island approach has inherent risks because committing to its construction requires confidence in the full realisation of the projected capacity. Unlike jacket foundations, an artificial island is more difficult to scale over time, making accurate projections critical to ensure the long-term viability of the business case.
"The key lies in developing standardised models that serve as the foundation for scalable solutions evolving in tandem with the market dynamics."
Are there current or emerging technologies that could help reduce the costs and improve efficiency for energy islands?
Initially, a well-defined model serves as the blueprint, but technology is not static. Continuous research and development for the HV/DC equipment is important at the moment. Solutions that reduce the size of the HV/DC equipment will have an impact on the weight of the platform and the amount of steel used for its construction. The less steel we use, the less expensive it becomes both in terms of materials as well as in terms of transportation and installation of these heavy components.
Green hydrogen and e-fuels will also play a crucial role as it is cheaper to transport high volumes of energy through pipes, rather than cables.
"Solutions that reduce the size of the HV/DC equipment will have an impact on the weight of the platform and the amount of steel used for its construction."
Can the concept of energy islands be adopted globally?
Yes, the concept of energy islands can be adopted globally, but it is also essential to consider factors such as regulatory frameworks and permitting, economic conditions, and local ecosystems.
Quick facts about energy islands
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What is an energy island?
Energy islands are connected renewable energy generation sites at sea. They could generate both electricity from renewable energy sources, as well as act as hubs for transmitting that electricity, or storing it as green hydrogen and e-fuels.
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Foundation
The island can either be a platform or set of platforms with a substructure foundation, an artificial island, or an existing island.
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Renewable energy sources
The primary energy source is typically offshore wind.
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Energy storage systems
Battery technologies or other innovative storage solutions ensure a stable energy supply during low wind conditions or peak demand.
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Grid integration
Subsea cables and grid infrastructure to connect the energy island to onshore grids.
Want to know more?
John Ammentorp
Vice Director, Power Systems
+45 51 61 63 80