As Europe pushes toward a green energy transition, the North Sea is set to become a powerhouse of offshore wind energy. However, the shift to renewables brings challenges, especially when it comes to planning for uncertain energy demand. New research from the Norwegian University of Science and Technology [63.0°N, 4.9°E] explores how risk-averse planning—a strategy that prepares for the highest-demand scenarios—can help ensure stable energy supplies while reducing reliance on fossil fuels.
The Challenge: Meeting Uncertain Demand with Renewables
Future electricity demand in Europe is expected to soar, driven by the electrification of transport, heating, and industries. However, the pace and scale of this increase remain uncertain. This volatility can create vulnerabilities in the power system, making it difficult to plan effectively for a grid powered by intermittent resources like wind. Traditional planning models typically take a risk-neutral approach, assuming average conditions for demand and supply, but this can fall short when sudden high-demand periods arise.
The Solution: Risk-Averse Planning for Renewable and Storage Investments
In this study, researchers propose risk-averse planning to counteract demand uncertainty. This approach emphasises preparation for peak demand scenarios, guiding planners to invest more heavily in renewable energy and storage solutions that hedge against fluctuating fossil fuel costs and volatile energy demands. The research suggests that when planners account for risk, investment in offshore wind and storage capacity in the North Sea increases by 17% for solar and 11% for onshore wind. These added investments ensure greater resilience in times of demand spikes.
Key Findings: Cleaner, More Cost-Effective Energy Solutions
The results indicate that risk-averse strategies do not just support stability but also promote sustainability. In scenarios with a set CO₂ price, risk-averse planning led to a reduced reliance on gas, a 17% boost in solar, and an 11% increase in onshore wind, significantly cutting overall emissions. In settings where a hard cap on CO₂ emissions was enforced, the carbon price itself dropped, reflecting the increased value and efficiency of renewable resources in a risk-averse model. Thus, risk-aware planning not only decreases emissions but also makes compliance with emissions caps more economically viable.
In cases without any carbon pricing policies, risk aversion resulted in more coal investment due to its lower variable costs in high-demand scenarios. This suggests that risk-aware planning strategies should ideally be paired with robust climate policies to ensure a steady shift away from fossil fuels altogether.
Paving the Way for a Resilient, Green Energy Future
The North Sea, with its abundant wind resources and plans for energy islands, is a critical piece of Europe’s renewable puzzle. The study underscores the importance of building a robust offshore wind grid to meet future electricity needs sustainably. Additionally, incorporating storage solutions and flexible renewables as part of a risk-averse model positions the North Sea as a leader in clean, reliable energy.
As Europe moves toward full decarbonisation, this research offers a blueprint for balancing risk with renewable energy investments, setting the stage for a cleaner, more resilient energy system in the North Sea and beyond.
Source
Nygaard, Lars Skjelbred and Dimanchev, Emil and Korpås, Magnus, Power System Planning in the North Sea Area Under Demand Uncertainty and Risk Aversion, SSRN (Elsevier), 2024-10-18
Boˆreal 