Offshore wind power grid connection-The impact of shallow versus super-shallow charging on the cost-effectiveness of public support

Public support for electricity generation from renewable energy sources is commonly funded by non-voluntary transfers from electricity consumers to producers. Apparently, the cost-effective disposition of funds in terms of induced capacity deployment has to be regarded a key criterion for the success of renewable energy policy. Grid connection costs are a major cost component in the utilization of offshore wind energy for electricity generation. In this paper, the effect of different attribution mechanisms of these costs on overall cost-effectiveness from consumers' perspective is analyzed. The major result of this investigation is that an attribution of grid connection costs to grid operators - as against to generators - leads to a smaller producer surplus and, hence, to lower transfer costs for electricity consumers. Applying this approach to the deployment of UK Rounds II and III offshore wind farms could lead to annual savings of social transfers of Pounds 1.2b and an equal reduction of producer surplus. This amount would be sufficient to finance the deployment of additional 10% of the capacity under consideration. - Highlights: → Grid connection costs of marginal wind farm add to submarginal producer surplus. → Overall producer surplus to be paid for by electricity consumers (transfer costs). → Allocating grid connection costs to grid operators leads to transfer cost savings. → Savings for UK Rounds II and III offshore wind farm projects may reach Pounds 1.2b per year. → These savings could finance additional 10% capacity (+3.3 GW).