Offshore Wind Worldwide Regulatory Framework in Selected Countries Cover photo & Intro © Siemens Gamesa Renewable Energy S.A. Offshore Wind Worldwide Regulatory Framework in Selected Countries 2nd Edition April 2021 Contributing editor: Dr Christian Knütel Partner, Hogan Lovells Hamburg Hogan Lovells International LLP Alstertor 21 20095 Hamburg T +49 40 419 93 0 4 Hogan Lovells Foreword Despite a period of global turmoil since the markets. Many of these emerging markets publication of this report’s first edition, the can be characterised by a rapidly growing offshore wind industry has continued to energy demand and high potential to reduce flourish. 2020 was a record-breaking year generation-based emissions; GW-scale for new offshore wind installations, resulting offshore wind deployment could play an in a total of over 35 GW operating across the important part in their energy transition. globe by the end of the year. This The demand and fierce competition for new accelerating pace will need to continue offshore wind concessions, especially in through this decade as it is widely expected markets with strong regulatory frameworks, that in 2030, well over 200 GW of offshore has continued to exceed expectations and wind will be generating worldwide. Looking astound regulators. This demand will further to the future, the Ocean Renewable provide further encouragement to early stage Energy Action Coalition (OREAC) has and emerging offshore wind markets and established a vision of 1,400 GW by 2050, should help to fuel this industry’s which will require a huge, global roll-out of accelerating growth. offshore wind and a much higher pace of deployment. Although this report addresses each country’s regulatory framework in turn, it is The global growth of offshore wind has important to appreciate the regional and resulted from the maturing of the technology global context of each market. Cooperation, and faster-than-anticipated reduction of coordination, and trade with other countries costs. This has piqued the interest of energy can be mutually beneficial, particularly in policymakers and politicians worldwide, promoting the reduction of costs and supply leading to the emergence of many new chain stability. markets. To help accelerate this global growth, the World Bank Group is supporting Readers of this report will be familiar with governments in countries with developing the term ‘Power-to-X’ which has been economies (such as India and Vietnam, which are summarised in this report) to establish and grow new offshore wind Offshore Wind Worldwide 2021 5 trending in the energy industry, and developments. I hope this report also helps especially so in offshore wind where X has regulators to be more aware of the regulatory ranged from green hydrogen to whisky. The frameworks in other markets and inspire the production of green hydrogen from offshore design and improvement of their own. As our wind is represented by a pipeline of proposed work in the World Bank Group continues to projects exceeding 17 GW, despite the fact support governments looking to establish that no offshore wind power has yet offshore wind, I look forward to seeing an produced a molecule of green hydrogen. increasing number of these developing This, along with the regular announcements economy, emerging markets featuring in of new and bigger turbine models, clearly subsequent editions of this report. demonstrates the innovation of this industry and its confidence to deliver. As technology matures, the new commercial models Mark Leybourne associated with the introduction of power- to-X will require further advances in the Senior Energy Specialist – Offshore Wind, breadth and complexity of the regulatory Energy Sector Management Assistance frameworks needed to deliver bankable Program (ESMAP) projects. As existing markets continue to mature and new markets begin to emerge, this report provides a valuable, informative reference to track these continual regulatory 6 Hogan Lovells Foreword The World Forum Offshore Wind (WFO) is offshore wind has continued to grow strongly delighted to see the publication of the second despite the challenging circumstances. edition of the Offshore Wind Worldwide Worldwide, 162 offshore wind farms are now handbook by our WFO member Hogan in operation across Europe, Asia and North Lovells. The immense interest in America. understanding the regulatory details for offshore wind energy in existing and In addition to seeing more and more emerging markets has made the first edition operational offshore wind farms, of this handbook an instant success. governments from around the world have However, given the dynamic nature of shown great interest in developing their regulation, it is essential to keep track of the respective offshore wind industries. Major changes in these offshore wind markets. This offshore wind nations such as the United second edition of the handbook is therefore Kingdom and Germany as well as new hugely beneficial to the global offshore wind markets like Japan have significantly community as it captures all regulatory increased their offshore wind targets. It is updates made by governments throughout therefore of paramount importance to have a the past year. clear understanding of each individual regulatory framework for offshore wind Given the extraordinary events seen during around the world. 2020, it is noteworthy to state that unlike many other industries which have struggled Some of the latest industry developments with the economic implications of further reveal the importance of thoroughly COVID-19, the offshore wind industry has understanding offshore wind regulatory shown remarkable robustness. This past year frameworks in detail. The regulation of has proven to be another record for the floating offshore wind, which will have its global offshore wind industry: with more commercial breakthrough within this than 5.2 GW of added capacity in 2020, decade, will soon be an integral part of the Offshore Wind Worldwide 2021 7 offshore wind industry. Even more complex from a regulatory point of view is the much-discussed use of offshore wind electricity to produce green hydrogen. Understanding the regulatory details of such new and exciting areas of the industry means that there will be more than enough content to cover for future editions of this handbook. In the meantime, this second edition serves as the perfect guide to navigate the industry across the seas of today’s regulatory frameworks for offshore wind. Gunnar Herzig Managing Director, World Forum Offshore Wind (WFO) 8 Hogan Lovells Editor’s Preface A year ago, this book was presented in its first edition. At that time, COVID-19 was still in its infancy and we made an optimistic forecast for 2020. But the pandemic was shaped the rest of the year and did not spare the offshore wind industry. Trade and mobility restrictions, safety regulations, disrupted supply chains, new project management challenges - all these and much more have led to temporary delays. As such, the pandemic has hampered the industry’s steady growth and postponed many investment decisions. The struggle is certainly not over yet. But as much as the current events require some degree of caution, there is also plenty of reason to be confident about making a leap forward this year. Many experts seem to agree that the industry has come through the crisis better and is more resilient than one might have expected a year ago. Europe added nearly 15 GW of wind power capacity in 2020, out of which 3 GW are offshore capacity.1 While this fell short of forecasts, it still represents a respectable increase. In Germany, even though the industry slowed down during the first pandemic Offshore Wind Worldwide 2021 9 Editor’s Preface lockdown, wind energy’s output in 2020 assessing the opportunities and risks of the exceeded the year 2019 by more than twelve most important global offshore wind percent, according to data from the German markets. We hope that it will entail a deeper grid operator TenneT.2 Across the Atlantic, understanding of the similarities and the US also saw a rush forward by wind differences across various national regimes, developers despite the pandemic, with as outlined by the authors of the respective capacity additions doubling in the first half chapters, who are all recognized experts in of 2020 compared to 2019.3 their fields and who happily share their first-hand knowledge with you. So there is reason enough to adopt an optimistic outlook on the post-pandemic era In this edition, again, I would like to and we are contributing to this with the conclude with the advice to contact the second edition of this book. The structure respective authors if you have any questions remains the same as in the previous edition, or comments. They look forward to but all contributions have been updated and exchanging ideas with you. supplemented, taking into account that regulatory policy frameworks are subject to constant change not only in times of crisis. Gusty greetings, New key laws and legislative amendments in Yours Vietnam and Germany, as well as Denmark’s new climate act, South Korea’s New Green Deal and ensuing policy and regulatory enactments, the creation of a new investment tax credit exclusively for offshore wind in the Dr Christian Knütel US, substantial governmental actions in Partner, Hogan Lovells further strengthening the competitiveness of [email protected] Japan’s offshore wind industry, and further developments in the national offshore wind energy plans and targets of the contributing jurisdictions are discussed in the revised chapters. This book provides readers again with up-to-date insights and assists them in 1 WindEurope’s report Wind energy in Europe 2020 Statistics and the outlook for 2021-2025, p. 7. 2 https://www.tennet.eu/news/detail/the-north-sea-is-becoming-the-powerhouse-of-northwest-europe-offshore-wind-energy-as-a- central-lev/ 3 See eg International Energy Agency’s report Covid-19 and the resilience of renewables.