The new German government wants to promote hybrid offshore grid connections and interconnectors of wind farms to cable and H2 pipelines.
The future German government has stated from the outset that it is committed to the German and European climate targets, but has also emphasised that climate change mitigation, economic competitiveness and social balance should be given equal consideration in achieving these targets. This requires innovation and a certain willingness to take risks. Hybrid offshore grid connections and interconnectors as well as the hybrid connection of wind farms to cable and H2 pipelines are innovations that the new German government wants to promote with the cooperation of countries bordering the North Sea.
Hybrid interconnectors: Investment risk and opportunity
The idea of hybrid grid connections or interconnectors is not new. The German Federal Ministry for Economic Affairs and Climate Protection (BMWK) and the transmission system operators 50Hertz, Amprion and TenneT published plans for the interconnection of offshore wind farms in the North Sea back in 2023. Their aim is to interconnect offshore wind farms and, in addition to connecting them to the German electricity grid, also enable electricity to be exchanged with neighbouring countries. The primary aim is to strengthen the security of the European electricity supply and to improve the utilisation and efficiency of power lines. One economic advantage in particular is that the possibility of exchanging electricity means that wind farms with less demand on the German market can be curtailed, i.e. operated with reduced output or even switched off completely.
Hybrid interconnectors also pay an integral part in achieving the jointly agreed climate targets at EU level. Cross-border electricity generation capacity is to be doubled by 2030 through both onshore and offshore projects. An estimated EUR 400,000,000.00 will be required by 2050 to expand offshore renewable energy installations. Making these investments available from public and private sources in the long term is a particular challenge. Project developers must weigh up the costs and benefits in particular.
Potential challenges for manufacturers, suppliers and EPC contractors
Specialised (construction) companies that offer the necessary services on the market to expand offshore wind farm capacities often do so as a consortium. Generally speaking, one contractor (possibly as a consortium) produces the actual offshore platforms while another produces and lays the cables. Due to tight milestone schedules, which are to be expected in view of the high targets in the field of offshore wind farm expansion, there are particular challenges here to ensure precise scheduling and schedule management by the contractors as well as accurate construction management. Contractual penalties due to non-compliance with milestones or the final completion date can hit contractors hard. In turn, contractors are required to document any obstructions by the principal in detail so that they can counter any claims for contractual penalties asserted by the principal with a valid justification.
Enabling the hybrid connection of wind farms
In addition, the future German government wants to enable the hybrid connection of wind farms to cable and H2 pipelines with the German Offshore Wind Energy Act (WindSeeG).
The expansion of offshore wind turbine generators connected to the grid and the expansion of the offshore connection lines required to transmit the electricity generated are to be synchronised.
At present, the German Offshore Wind Energy Act (WindSeeG) phrases the law's objective as (section 2 (2) sentence 1):
to increase the installed capacity of offshore wind turbine generators connected to the grid to a total of at least 30 gigawatts by 2030, to a total of at least 40 gigawatts by 2035 and to a total of at least 70 gigawatts by 2045.
The German Offshore Wind Energy Act (WindSeeG) thus indirectly specifies two prerequisites for achieving its stated goal regarding the "installed capacity of wind turbine generators and grid connection" with the above sentence, namely the expansion of wind turbine generators and the associated connection lines, without making any further differentiation. According to the coalition agreement, the hybrid connection of offshore wind farms to H2 pipelines is now to be promoted or at least made possible in the German Offshore Wind Energy Act (WindSeeG) in addition to the "traditional" connection line via cable.
What does this mean in practice? The idea of using "green energy" generated from the wind farms to produce "green hydrogen" by means of electrolysers and transporting it directly through H2 pipelines (yet to be built) is a good one. However, the expansion of such H2 pipelines is likely to be just as resource-intensive as the current expansion of offshore wind farms.
Here, the coalition agreement can only be understood to be a hint at or a harbinger of things to come.
What should you be aware of?
The coalition agreement promises that offshore wind farm projects will continue and adds some relevant elements to the status quo. This reaffirmation by the future government should provide some level of certainty that investments in this branch of the energy industry will continue to be worthwhile in the future.
There are implementation challenges for EPC contractors, manufacturers and suppliers on the one hand and for principals and investors on the other, for example with regard to tight deadlines and the associated promised readiness to deliver electricity. Particularly with regard to the time factor, such projects also pose classic problems that will be familiar from private construction law, such as construction hindrance or construction delay claims and resulting claims for the execution time to be extended or for additional costs. Professional contract drafting to hedge against and fairly distribute risks is essential, especially for these complex wind farm projects.
We will keep an eye on the developments surrounding the coalition agreement and the political and economic innovations that result from it and keep you up to date.
