Partner Hamburg
"In Germany alone, the installed capacity of offshore wind turbines is set to grow to at least 30 GW by 2030 and 70 GW by 2045."
The expansion of offshore wind energy is one of the central projects of the energy transition at both German and European levels. In Germany alone, the installed capacity of offshore wind turbines is set to grow to at least 30 GW by 2030 and 70 GW by 2045. In the EU, the target is even greater at 111 GW by 2030 and 317 GW by 2050. These targets make close cooperation between the energy, infrastructure and transport sectors indispensable.
In particular, the close link between offshore wind energy and the maritime industry opens up new opportunities for market participants. A stronger political focus on sustainable value creation and (cyber) security can have a lasting impact on the market environment and open new opportunities for German shipyards, manufacturers and companies in the maritime and energy industries in particular. This will support the expansion of offshore infrastructure in the long term.
This article provides an overview of the key players, the market environment and investment opportunities. It also examines funding programmes and the regulatory framework conditions that are important for the expansion of offshore wind energy.
OVERVIEW – ACTORS
Many players interact in electricity generation from offshore wind energy, including:
"The close link between offshore wind energy and the maritime industry opens up new opportunities for market participants."
- operators of offshore wind farms who are responsible for the construction and operation of wind turbines;
- grid operators who ensure the grid connection of offshore wind farms, including the construction of the converter platforms and converters to convert alternating into direct current for low-loss transport of electricity over long distances;
- shipyards with the necessary expertise to build specialised ships and converter platforms for the offshore industry;
- shipping companies and providers of offshore services that acquire, operate and lease specialised vessels;
- port operators who provide the necessary (heavy-duty) port infrastructure required in particular for the storage and transport of structures and components as well as the dismantling of facilities;
- operators of electrolysis plants that produce green hydrogen directly at sea from renewable electricity from wind energy;
- the supply industry which provides the necessary raw materials and components at the upstream stage of the value chain; and
- financiers who play a central role at all these levels.
This makes it clear that cross-sector solutions are required for the successful further development of the offshore wind energy market. New technology and specialised infrastructure such as special ships, converter platforms (offshore) and converters (onshore) are particularly important.
MARKET ENVIRONMENT – FROM CLIMATE POLICY TO INDUSTRIAL POLICY?
"It is also expected that more than 20 converter platforms will be required for German offshore wind farms alone by 2045."
The offshore wind energy market offers promising economic prospects in view of the ambitious targets set at German and European level, such as the construction of specialised vessels and converter platforms for energy transport. The demand for specialised vessels such as Construction Service Operation Vessels (“CSOVs”) and Service Operation Vessels (“SOVs”) as well as converter platforms will continue to increase in the coming years, opening up opportunities for companies to contribute their expertise to the offshore wind energy sector and strengthen their market position. It is estimated that up to 100 CSOVs and SOVs could be required. It is also expected that more than 20 converter platforms will be required for German offshore wind farms alone by 2045. According to the Federal Ministry for Economic Affairs and Climate Protection (“BMWK”), the cost per converter platform is around €2.5bn, which illustrates the market potential. German shipyards now have an opportunity to enter a growing sector that will be crucial for the energy transition in the long term.
The expansion of offshore wind energy is an international trend. The demand for specialised ships and infrastructure is growing worldwide, creating additional export opportunities for companies. Further opportunities lie in the construction of interconnectors, which enable the connection of offshore facilities in neighbouring countries.
Until recently, however, the corresponding specialised ships, converters and converter platforms were not built in Germany, but mainly in Norway, Spain and Asia. The segment has been less of a focus for German shipyards to date due to a lack of government support and an often-politicised environment in Germany. In Asia, for example, there are government funding programmes and subsidies that support the maritime industry and strengthen national competitiveness. Looking to the future, however, there is considerable potential to tap into this market segment and assert itself against international competition due to the regulatory requirements regarding the expansion of offshore wind energy.
"Both climate and industrial policy are moving more into focus. Policymakers are pushing ahead with various instruments that not only promote climate protection and the expansion of offshore wind energy, but also take greater account of the entire value chain."
Both climate and industrial policy are moving more into focus. Policymakers are pushing ahead with various instruments that not only promote climate protection and the expansion of offshore wind energy, but also take greater account of the entire value chain. The special guarantee programme of the federal and state governments for the construction of converters and converter platforms plays a central role here, from which the manufacturers of the corresponding infrastructure are to benefit, in particular HVDC suppliers and shipyards (see also “support at national and international level” below).
In May 2024, the BMWK presented a proposal for “lead markets for climate-friendly raw materials”. In addition to climate protection agreements and emissions trading, the transformation of the industry is to be driven forward by further incentive mechanisms. There are plans to introduce a label for climate-friendly raw materials, particularly for steel, which will be considered in public procurement.
There are also calls for an adjustment to the tender design, according to which far greater importance should be attached to qualitative criteria and value creation than has been the case to date. The current principle of revenue maximisation, where the contract is awarded to the bid with the lowest price, is to be replaced by a new concept that takes these requirements into account. This also offers German shipyards and manufacturers the opportunity to assert themselves against international competitors.
OFFSHORE WIND AS AN INVESTMENT FIELD
The project costs are considerable. In addition to investments in offshore wind farms, including their construction, maintenance and dismantling or repowering – which requires the use of specialised ships – there is a further need for financing as part of the development of port capacities for the storage of foundations and components (“energy ports”). The construction of converter platforms for grid connection will in turn require steel structures, which will require investments totaling billions. There is considerable potential for investment here for various investor groups, from energy companies to institutional investors. Funds, such as Energy Transition Funds and Sustainable Infrastructure Funds, which specifically promote sustainable projects, are becoming increasingly important.
The categorisation of the economic activity or investment under the Taxonomy and Disclosure Regulation, which has a significant impact on the financing conditions, plays an important role here. Electricity generation from wind power can be categorised as an environmentally sustainable activity within the meaning of the Taxonomy Regulation. Corresponding investments can therefore benefit from favourable financing conditions. However, the specific categorisation of the activity or investment may differ for the various actors, depending on the area of activity concerned. A precise distinction must be made here between electricity generation from wind energy, the upstream stages of the value chain (the supply industry) and grid operation.
SUPPORT AT NATIONAL AND INTERNATIONAL LEVEL
Funding programmes exist at both the European and German level. At the European level, so-called “PCIs” (Projects of Common Interest) and “PMIs” (Projects of Mutual Interest) in particular benefit from financial support and favourable regulatory conditions as part of the “CEF Energy” funding programme. In addition, financial support for projects is provided by the European Investment Bank (“EIB”), which is supporting the European wind industry with counter-guarantees totalling EUR €5bn as part of the implementation of the European Wind Energy Action Plan.
"At a national level, politicians are providing the first important impetus. In July 2024, the federal government and the initially affected federal states of Bavaria, Berlin, Bremen, Hamburg, Mecklenburg-Western Pomerania and North Rhine-Westphalia jointly launched a special guarantee programme for the construction of converters and converter platforms."
At a national level, politicians are providing the first important impetus. In July 2024, the federal government and the initially affected federal states of Bavaria, Berlin, Bremen, Hamburg, Mecklenburg-Western Pomerania and North Rhine-Westphalia jointly launched a special guarantee programme for the construction of converters and converter platforms. They have agreed to enter into parallel indemnity bonds for up to 80% of the contract bonds to be provided (advance payment, performance and warranty bonds) following the necessary checks in individual cases. This is intended to provide manufacturers (suppliers of HVDC and shipyards) with financial security. The continuation of the funding guideline “Innovative shipbuilding secures competitive jobs” also makes a valuable contribution to strengthening the competitiveness of the German shipbuilding industry. As part of the package of measures for the wind industry of 16 October 2024, the BMWK also suggested an expansion of the KfW programme “Syndicated Loan for Sustainable Transformation”. The course taken by the future German government will be decisive in the coming months.
Regarding the upstream and downstream stages of the value chain, there are other funding instruments that may be relevant. On the one hand, the German steel industry, which is essential to produce converter platforms and converters, can be financially supported with climate protection contracts. On the other hand, offshore electrolysis funding guideline promotes hydrogen production at sea. The aim here is to utilise possible synergies and portfolio advantages.
REGULATORY FRAMEWORK
Offshore wind farms create energy infrastructure that plays a central role in the supply of energy using specialised ships and systems. This requires compliance with specific legal requirements, which are applied individually depending on the project.
Requirements for offshore wind power and connection
Offshore wind farms are primarily subject to the provisions of the Act on the Development and Promotion of Wind Energy at Sea (“WindSeeG”), supplemented by the provisions of the Renewable Energy Sources Act (“EEG”) and the Energy Industry Act (“EnWG”). The WindSeeG contains provisions for three particular areas which are especially relevant for offshore projects:
- specialised planning in the exclusive economic zone and the preliminary investigation of areas for electricity generation from offshore wind turbines – which is also decisive for determining the locations of converter platforms and grid connections;
- the tenders for the competitive determination of those entitled to bid and the awarding of the contract for offshore wind turbines – which influence the expected yields and financing conditions; and
- the authorisation, construction, commissioning and operation of offshore wind turbines, offshore connection lines and lines or cables – the authorisation procedure (planning approval procedure) and obligations of the operators regarding construction, operation including repowering are regulated in detail. Special requirements also apply to offshore structures.
The construction of converter platforms is the responsibility of the operators of the relevant transmission grids (TenneT and 50hertz). They award the services to be provided (if more precisely defined thresholds are exceeded) as part of international tenders. In this respect, they are bound by the requirements of EU and German public procurement law as sector contracting authorities as per Sections 100 and 102 GWB. The procedure regularly results in the conclusion of an EPCI contract, which includes a bundle of services (engineering services, procurement of the necessary components as well as construction, transport and installation of systems at sea and on land). As the amounts to be spent are often in the billions, it is common for consortia of several companies to be formed, which may utilise additional subcontractors as part of the service provision.
Special ships
It is also essential to comply with the applicable national and global regulations regarding the manufacture and use of specialised ships. These include safety regulations, limits on greenhouse gas emissions and requirements for the disposal and recycling of such ships.
Critical infrastructure
Special requirements also apply to operators of critical infrastructure. A distinction must be made here between grid operation and operating the energy system (i.e. the offshore wind farm), insofar as it falls under the Ordinance on the Determination of Critical Infrastructures under the BSI Act (BSI Critical Infrastructure Ordinance). The former is particularly relevant as the construction of converter platforms is the responsibility of the transmission system operators and therefore their (secure) operation is also their responsibility. The special provisions of the Energy Industry Act apply to both groups. The general provisions of Sections 8a, 8b (4), 4a of the Act on the Federal Office for Information Security (BSI Act – BSIG) are not applicable here (see Section 8d (2) No. 2, (3) No. 2 BSIG), although individual supplementary provisions of the BSIG remain applicable.¹
The focus is therefore primarily on the requirements in accordance with Section 11 (1a) to (1f) EnWG. These address five areas: ensuring adequate protection against threats to telecommunications and electronic data processing systems and corresponding IT security requirements (“IT security catalogue”); the obligation to report faults; the obligation to register and appoint a contact point; the establishment of systems to detect attacks; and the regulation of critical components and functions.
The operators of energy supply networks are accorded a special status within the CRITIS sectors – they are subject to the regulatory regime regardless of their size and potential risk in individual cases. The reason for this is that all other sectors, such as information technology and telecommunications, water, healthcare or government and administration, are dependent on a secure and reliable supply of energy and electricity for their ability to function whilst, conversely, energy supply is at best only partially dependent on other KRITIS sectors.²
The importance of (cyber) security was recently highlighted as part of the BMWK’s package of measures for the wind industry of 16 October 2024 and an increase in security requirements was suggested, particularly with regard to the use of critical IT components. It is to be hoped that the new federal government will further expand the current requirements of the EnWG and BSIG in view of the current security situation.
CONCLUSION
Offshore wind energy offers immense potential for the energy transition and economic development in Germany and worldwide. Investments in specialised infrastructure such as converter platforms and special ships are just as crucial as adapting the regulatory framework and funding programmes. The focus on industrial value creation, sustainable technology and IT security will be of central importance to secure the competitiveness of German shipyards and manufacturers on the international market and to achieve the ambitious targets for the expansion of offshore wind energy. Ultimately, all players will benefit from closer cooperation and coordination between the energy and maritime industries.
[1] If the scope of application of Section 11 EnWG does not apply, the general provisions of Sections 8a f. BSIG apply.
[2] See OLG Düsseldorf dated 19 July 2017 – VI-3 Kart 109/16 (V), para. 45 f.; Theobald/Kühling/Theobald/Bartsch, 126th EL July 2024, EnWG Section 11 para. 40; Bourwieg/Hellermann/Hermes/Frechen EnWG Section 11 para. 126.
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