Comparing Regulatory Designs for the Transmission of Offshore Wind Energy

Offshore wind plays an ever-increasing role for the global transition to renewable energy. For offshore wind energy to be successful, cost-effective transport of the produced electricity to shore is necessary. The development and operation of the offshore transmission asset is costly and regulated differently across the globe. In most countries, the TSO is responsible for the transmission and develops and operates the asset separately from the offshore wind farm. Other countries have established a competitive tender with integrated development of the offshore wind farm and the transmission asset. However, there is so far no empirical analysis of the economic benefits of different regulatory designs regarding the offshore transmission assets. In this paper, we collect a unique data set on offshore transmission assets that compares empirical cost and quality of offshore transmission assets in two countries with different regulatory regimes for the first time. With project level data we can control for geographical as well as technical difference to assess which regulatory design might lead to lower economic costs for the offshore transmission asset. Comparing the cost in the two leading countries for offshore wind energy, we find that a competitive regime leads to lower transmission cost and similar transmission availability.