Impact of Offshore Bidding Zones on offshore hybrid projects the case of LionLink interconnector

The ambitious Dutch offshore wind targets aim for more than 21 GW of installed capacity by the mid-2030s, including a hybrid project—an offshore wind farm connected to two bidding zones. These hybrid projects are envisioned to be operated under offshore bidding zones (OBZs) to integrate into the European electricity market. Thus, to participate in the tenders of hybrid-connected wind farms, developers need clarity on how this relatively new market setup of OBZs will affect their business cases. With this study, TNO provides quantitative insights into the impact of OBZs on offshore wind business under the 2030 energy scenario (TYNDP Global Ambition) by taking the case of LionLink—a planned interconnector that connects a 2000 MW wind farm to the UK and the Netherlands. The results from power market simulations of LionLink show that: • The electricity prices in the OBZ are always equal to or lower than prices in the Dutch bidding zone. Consequently, the expected yearly income for a 2000 MW wind farm, bidding in the day-ahead market, is reduced by approximately 33% when operating under the OBZ compared to the current home market (HM) set-up. • Due to the non-symmetric interconnection capacity of LionLink configuration (1800 MW to the UK and 2000 MW to the Netherlands), prices at the OBZ can be higher than prices in the UK bidding zone. • Connecting a price-responsive electrolyzer in the OBZ marginally increases the day ahead prices in the OBZ, resulting in only around a 1% increase in wind farm revenue with a 200 MW electrolyzer and around 2% with a 1000 MW electrolyzer. • Due to the lower prices in the OBZ, resulting from the high penetration of renewable energy in the UK, the full load hours of an electrolyzer connected to the OBZ are more than double those of an electrolyzer connected to the Dutch bidding zone or operating in the home market setup. This makes the business case for an offshore electrolyzer significantly better and shows the higher market efficiency presented by the OBZ set up