Optimal Grid Layouts for Hybrid Offshore Assets in the North Sea under Different Market Designs

TL;DR

This paper compares different offshore grid market designs in the North Sea, developing a stochastic planning model to evaluate social welfare and optimal layouts for hybrid offshore assets.

Contribution

It introduces a multi-period stochastic GATE planning model for both zonal and nodal market designs, assessing their impact on offshore grid expansion and social welfare.

Findings

Nodal market design (nOBZ) yields the highest social welfare.

Planning under nOBZ provides the best risk-adjusted return.

Upper bounds on welfare are calculated for zonal designs.

Abstract

This work examines the Generation and Transmission Expansion (GATE) planning problem of offshore grids under different market clearing mechanisms: a Home Market Design (HMD), a zonal cleared Offshore Bidding Zone (zOBZ) and a nodal cleared Offshore Bidding Zone (nOBZ). It aims at answering two questions. 1) Is knowing the market structure a priori necessary for effective generation and transmission expansion planning? 2) Which market mechanism results in the highest overall social welfare? To this end a multi-period, stochastic GATE planning formulation is developed for both nodal and zonal market designs. The approach considers the costs and benefits among stake-holders of Hybrid Offshore Assets (HOA) as well as gross consumer surplus (GCS). The methodology is demonstrated on a North Sea test grid based on projects from the European Network of Transmission System Operators' (ENTSO-E) Ten Year Network Development Plan (TYNDP). An upper bound on potential social welfare in zonal market designs is calculated and it is concluded that from a generation and transmission perspective, planning under the assumption of an nOBZ results in the best risk adjusted return.