Impact of Spanish Offshore Wind Generation in the Iberian Electricity Market: Potential Savings and Policy Implications

energies Article Impact of Spanish Offshore Wind Generation in the Iberian Electricity Market: Potential Savings and Policy Implications Juan-Manuel Roldan-Fernandez 1, Javier Serrano-Gonzalez 1, Francisco Gonzalez-Longatt 2 and Manuel Burgos-Payan 1,*   Citation: Roldan-Fernandez, J.-M.; Serrano-Gonzalez, J.; Gonzalez-Longatt, F.; Burgos-Payan, M. Impact of Spanish Offshore Wind Generation in the Iberian Electricity Market: Potential Savings and Policy Implications. Energies 2021,14, 4481. https://doi.org/10.3390/en14154481 Academic Editor: Carlos Guedes Soares Received: 19 June 2021 Accepted: 19 July 2021 Published: 24 July 2021 Publisher’s Note: MDPI stays neutral with regard to jurisdictional claims in published maps and institutional affiliations. Copyright: © 2021 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (https:// creativecommons.org/licenses/by/ 4.0/). 1Department of Electrical Engineering, Universidad de Sevilla, 41004 Sevilla, Spain; [email protected] (J.-M.R.-F.); [email protected] (J.S.-G.) 2 Department of Electrical Engineering, Information Technology and Cybernetics, University of South-Eastern Norway, 3918 Porsgrunn, Norway; F[email protected] *Correspondence: mbur[email protected] Abstract: The European Union considers that offshore wind power will play a key role in making the EU the first climate-neutral continent by 2050. Currently, the potential of offshore wind energy is still untapped in Spain. Furthermore, the characteristics of the coastline in Spain require floating technology, making it challenging to install wind farms due to their current high cost. This work seeks to quantify the impact that Spanish offshore wind energy would have on the Iberian electricity market. Several offshore wind scenarios are evaluated by combining available information in relation to areas suitable for installing wind farms and wind resource data. The impact on the day-ahead electricity market has been obtained by reproducing the market, including these new offshore wind generation scenarios. The introduction of this renewable energy results in a market cost reduction in what is known as the merit-order effect. According to our estimates, for each MWh of offshore wind energy introduced in the market, there would be a market cost reduction of 45 € . These savings can serve as a reference for regulators to adjust their policy framework to boost floating wind offshore generation. Keywords: floating offshore wind farm; day-ahead market; merit-order effect; offshore wind energy 1. Introduction Currently, the European Union seeks to boost the transition to a climate-neutral energy system, by using low-carbon technologies through what is called the Strategic Plan for Energy Technologies or SET-Plan [ 1 ]. The European Commission intends to become a world technology leader in floating offshore wind. The European Green Deal [ 2 ], approved by the European Union in December 2019, also reinforced this objective and emphasized the importance of offshore renewables, so as to make the EU the first climate-neutral continent by 2050. More precisely, in the case of Spain, the Sectorial Agenda of the Wind Industry [ 3 ], in collaboration with the Spanish Ministry of Industry, Trade, and Tourism, identifies offshore wind energy as one of the main future drivers capable of strengthening the Spanish wind industry. In this report, a series of actions are proposed to develop the offshore wind industry. The European wind industry association, Wind Europe, in [ 4 ] states that offshore wind energy will help Europe become carbon neutral. This report estimates that 70 GW of offshore wind energy will have been installed in southern Europe by 2050. A capacity of 13 GW will have been installed in Spain. In the short term, the authors in [ 5 ] estimate the installation of 0.25 GW of offshore wind energy by 2022, with a turbine power capacity of 7.8 MW. In addition, by 2019, around 10 floating-type turbines had already been installed in Europe. Regarding the situation in Spain, the authors present the situation in 2015 in [ 6 ] as well as the expected growth of offshore wind power facilities. The study analyzes the principal causes of the non-implementation of this technology. The research proposes the development of solutions for floating wind turbines by reducing Energies 2021,14, 4481. https://doi.org/10.3390/en14154481 https://www.mdpi.com/journal/energies Energies 2021,14, 4481 2 of 17 costs, providing a stable regulatory framework and ensuring government approval of complementary measures that promote investment in this field. The Covid-19 Recovery Plan, recently approved by the European Commission to reactivate economies, considers offshore wind power as playing a key role in this regard; therefore, this represents a significant opportunity to encourage investment in this sector. The European Union has agreed to develop offshore wind energy through the Recovery Funds, based on the European Marine Energy Strategy. The commitment of the European Union to promote renewable technologies as part of the scenario to achieve climate neutrality in 2050 has resulted in offshore wind power being considered a fundamental pillar of the energy mix. Specifically, the European Union has set the targets for offshore wind technology at more than 60 GW by 2030 and 300 GW by 2050 [7]. The development of the National Energy and Climate Plans [ 8 ], mandatory for all European countries, has indicated that more countries consider offshore wind energy as a key technology in achieving their climate targets. In the case of Spain, offshore wind power has not yet gained sufficient relevance. Contrary to the developments in many European countries in relation to lesser wind conditions, Spain did not include clear objectives with regard to offshore wind power for 2030 (see Table 1). Spain’s neighboring countries, such as Portugal or France, whose coastlines have similar characteristics to those of Spain, are already considering floating marine energy as an additional tool to achieve emission reduction targets. Nevertheless, the Spanish Energy and Climate Plan recognizes that marine energy and energy from offshore wind technology in deep waters remain uncompetitive but have great potential. In this respect, the plan suggests that these technologies could be supported with public financing. Table 1. Target for offshore wind capacity (GW) for Spain, Portugal, and France. Year 2020 2023 2030 Spain (onshore + offshore power capacity, GW) 28 - 50.3 Portugal (offshore power capacity, GW) 0.03 - 0.3 France (offshore power capacity, GW) - 2.4 5.2–6.2 As previously mentioned, the Spanish Energy and Climate Plan estimates that wind generation capacity will increase by around 22.3 GW between 2020 and 2030, without determining how much power will correspond to offshore wind generation. This equates to a wind power growing ratio of around 2.23 GW/year across the actual decade. Although there are no specific national targets for wind energy, it should be noted that certain regional authorities, in particular the Canary Islands, have set a specific target of 300 MW by 2025. Likewise, the Spanish wind energy association considers that a national installed quota of between 2000 and 3000 MW by 2030 would be achievable [9]. What is clear is that a percentage of this power should come from offshore technology, since onshore areas/locations with the best wind resources are already being exploited, making it more challenging to find suitable locations for new onshore wind farms. Regarding the potential of Spanish offshore wind energy, the Institute for the Diversification and Saving of Energy in Spain [ 10 ] has carried out a detailed study, identifying potential locations for wind farms, considering possible restrictions such as environmental issues, marine traffic, etc. This study concluded that areas with low bathymetry are scarce in the country; therefore, offshore wind generation is primarily associated with floating technology, unlike the enormous developments that have occurred in the North Sea, which are mainly foundation-based technologies. Using floating technology, the extreme depths of the Spanish waters will no longer constitute an obstacle, and Spain will be able to take advantage of the excellent wind resource potential. Moreover, Spain possesses the technological infrastructure to address the demand for future domestic floating technology offshore, since Spain has been exporting components for European offshore wind farms for several years [11]. In 2019, the first offshore wind turbine (gravity-based foundation) was installed on the island of Gran Canaria, with a generation capacity of 5 MW [ 12 ]. There are Energies 2021,14, 4481 3 of 17 several experimental platforms in Spain, as well as multiple prototypes under development by Spanish companies, proving the technological capabilities in offshore wind energy and in floating technology. Some research programs involving the development of floating wind technology, are grouped within the program of Singular Technical Infrastructures [ 13 ]. Certain Spanish enterprises/corporations have elaborated on and submitted proposals to the Next Generation EU programme [ 14 ], articulated through the Spanish Recovery, Transformation and Resilience Plan of the Ministry of Energy Transition [ 15 ], for the commissioning of floating offshore wind facilities on an industrial scale along the coasts of Andalusia, the Canary Islands, and Galicia. For example, Iberdrola [ 16 ] plans to allocate more than € 1 billion of investment to commissioning a 300 MW floating offshore wind farm. The company views this project as an opportunity to expand the country’s supply chain and convert the Spanish industry as an international benchmark. The development of this project would create around 2800 jobs per year, with the participation of 66 Spanish companies, various technology centers, and numerous small and mid-size enterprises (more than 50). The study [ 17 ] estimates that floating offshore wind power alone will create more than 17,000 direct jobs, plus a further 13,000 indirect jobs on the Iberian Peninsula by 2030. In this way, offshore wind energy will contribute very positively to the employment impact foreseen in the Spanish Energy and Climate Plan [ 8 ], which estimates a net job creation of between 253,000 and 348,000 by 2030, as a result of the energy transition process. Currently, floating offshore wind turbines are less able to compete with other renewable technologies (photovoltaic or onshore wind generation). The levelized cost of energy (LCOE) for floating offshore wind turbines is greater than for fixed offshore wind turbines, since floating technology is more complex. Floating wind farms are located deeper in the ocean to take advantage of stronger winds. The floating structure makes this technology more expensive. In addition, when the distances are greater, there are more cable losses and a higher reactive power compensation (HVAC transmission system). This drastically reduces the active power transmission capacity in the case of lengths greater than 50–70 km in submarine power system transmission [ 18 ]. For longer distances, it is necessary to use an HVDC transmission system. This technology consists of using converter stations, based on power electronics to rectify to direct current. Therefore, although the wind resource is better than onshore resources, offshore wind farms would incur additional costs and higher energy losses. This makes it difficult to compare the LCOE of offshore wind technology with other technologies, such as onshore wind energy or solar power. A recent overview of the current state and future trends of the offshore wind farms along with the technological challenges can be seen in [ 19 ]. Geographic information systems—GIS—has also been used for the optimal site selection of floating wind farms [ 20 ]. The study considered the about 3.4 million of km 2 of the Atlantic Exclusive Economic Zone of Portugal, Spain, and France, where only 0.22% of that area is able to host floating wind turbines. The authors concluded that the proposed support tool can help decision makers to eliminate unsuitable areas and identify those where sustainability can be maximized. A methodology to calculate the life-cycle cost of floating offshore renewable energy devices (wave and wind) was introduced in [ 21 ]. The researchers found that the most important life-cycle cost is the exploitation cost, which is followed by the manufacturing and the installation cost. The LCOE for a floating offshore wind farm was estimated in [ 22 ] for different countries. The LCOE varies from 287.8 to 109.3 € /MWh. In [ 23 ], the authors analyze the feasibility of floating offshore wind farms in Portugal. They found that the LCOE is 289.49 € /MWh for the spar platform, followed by the semisubmersible platform (303.97 € /MWh) and the TLP platform (325.64 € /MWh). According to the research project [ 24 ], the LCOE for 1 GW of floating wind energy in the Celtic Sea by 2035, would be in the range of 63–90 € /MWh. In the case of the west coast of Ireland, the LCOE would vary between 75 and 107 € /MW. With regard to these LCOE values, it is clearly difficult to achieve a certain profitability in this type of project, by covering the costs solely with income from the electricity market. A similar conclusion was reached by Castro-Santos et al. in [ 25 ]. The authors assessed the economic feasibility of offshore wind farms installed in deep waters considering their Energies 2021,14, 4481 4 of 17 internal rate of return (IRR), net present value (NPV), and LCOE. They studied the case of the Cantabrian and North-Atlantic coasts of Spain and found that the best value for LCOE was 172.81 € /MWh for the semisubmersible platform. The authors also found that present retribution for this type of technology in Spain is not enough to support the great investment necessary in this type of offshore wind farm, since they estimated that the necessary compensation for this type of installation to be profitable should be about 200 €/MWh. In 2020, the Real Decree 960/2020 [ 26 ] established a new remuneration system for renewable energy sources (RES), based on a tendering system using contracts-for-difference (CfDs). The main objective of a tender, as a competitive bidding procedure, is to determine cost-efficient support levels for RES technologies. In relation to the CfDs, wind farms pay back when the market price exceeds the auction price. Governments only pay out when the market price is lower than the auction price. This regulatory system considers a minimum and maximum bid level (price caps). On one hand, bids above the maximum price are rejected (to incentivize bids that take into account its costs). On the other hand, bids below the minimum are also rejected. Admitted bids between the price caps will be arranged in ascending order, until the tendered volume limit is reached. The first tender was submitted in January 2021 for a generation capacity of 3 GW [ 27 ]; there was no capacity reserve for offshore wind generation. The tendered volume was distributed for a generation capacity of 1 GW for solar photovoltaic generation (PV), 1 GW for onshore wind generation, and 1 GW without any technology restrictions. The PV generation was finally awarded with two-thirds of the tendered volume. There were no bids from offshore agents, and the auction resulted in the lowest ever prices for onshore wind energy in Europe. The onshore wind bids ranged from 20 to 28.89 € /MWh. The maximum price cap was not published, since the regulation establishes that the maximum price cap might be confidential and might only be known by the agents participating in the tendering process. Technology neutral auctions would put offshore wind projects at a disadvantage when forced to compete on price with onshore wind or solar projects. In the event that the government organizes a specific auction for offshore wind generation, the government should consider the characteristics of this technology and its state of maturity. Otherwise, the auction may not be successful. The aim of this work is to estimate the economic impact of this technology on the day-ahead electricity market that could be used by the government or policy makers to adjust or establish the remuneration regime for this technology, either within the current regulatory framework or another framework. Policy makers have to find a balance between the benefits provided by the technology they are trying to promote and the cost of that generation. The integration of renewables creates economic benefits for consumers when they participate in the day-ahead electricity market. This effect, described in [ 28 – 31 ], is known as the merit-order effect, and it constitutes a decrease in energy prices when renewables offer their energy at a very low price in a day-ahead electricity market. This work seeks to estimate the impact that offshore energy would have on the day-ahead Iberian electricity market. The potential savings can serve as the basis for the Spanish government or policy makers to promote the development of floating offshore wind energy as another instrument to achieve decarbonization and meet EU targets. The purpose of this study is twofold: firstly, we estimate the floating offshore wind resources in the most likely location and their impact on the daily electricity market, obtaining the new clearing prices. Secondly, for different scenarios relating to floating offshore wind energy penetration, we quantify the new market cost, obtaining the cost reduction per MWh of floating offshore wind energy. The estimate of the merit-order effect of the offshore technology could be used to modulate auctions (set maximum prices) or design subsidies or premiums accordingly. The document’s structure is as follows: Section 2analyzes the wind resources and describes the method to reproduce the day-ahead electricity market. Section 3details how the market responds to this new generation and discusses the main findings. Section 4 concludes. Energies 2021,14, 4481 5 of 17 2. Materials and Methods Firstly, to determine how floating offshore wind generation would affect the market, it is necessary to estimate hourly wind energy production. To evaluate the wind resource, we assume that wind farms will be installed in those areas where the wind resource is abundant and with few environmental or maritime constraints. Based on these assumptions, four locations have been chosen for offshore wind farms: the North Atlantic zone (north and west of Galicia), the South Atlantic zone (southwest of Andalusia), and the North Mediterranean zone (Catalonia). Figure 1shows the locations of the wind farms. The maps also represent the mean wind speed. The mean wind speed estimate was obtained from the Global Wind Atlas [ 32 ]. This application uses large-scale wind climate data and extrapolates it to micro-scale wind data (by means of a downscaling process). The mean wind speeds shown in the figure correspond to the period 2008–2017, with a calculation node spacing of 250 m. Energies 2021, 14, x FOR PEER REVIEW 5 of 18 technology could be used to modulate auctions (set maximum prices) or design subsidies or premiums accordingly. The document’s structure is as follows: Section 2 analyzes the wind resources and describes the method to reproduce the day-ahead electricity market. Section 3 details how the market responds to this new generation and discusses the main findings. Section 4 concludes. 2. Materials and Methods Firstly, to determine how floating offshore wind generation would affect the market, it is necessary to estimate hourly wind energy production. To evaluate the wind resource, we assume that wind farms will be installed in those areas where the wind resource is abundant and with few environmental or maritime constraints. Based on these assumptions, four locations have been chosen for offshore wind farms: the North Atlantic zone (north and west of Galicia), the South Atlantic zone (southwest of Andalusia), and the North Mediterranean zone (Catalonia). Figure 1 shows the locations of the wind farms. The maps also represent the mean wind speed. The mean wind speed estimate was obtained from the Global Wind Atlas [32]. This application uses large-scale wind climate data and extrapolates it to micro-scale wind data (by means of a downscaling process). The mean wind speeds shown in the figure correspond to the period 2008–2017, with a calculation node spacing of 250 m. Figure 1. Offshore wind farm locations and mean wind speed [32]. The wind resource characteristics and restrictions in each area are detailed in the next section. Different levels of wind power capacity are assumed for these locations, and the effect on the daily electricity market is evaluated using the hourly information retrieved from the Iberian market operator (OMIE) [33]. 2.1. Offshore Wind Locations in Spain and Wind Resource Analysis In 2011, the Spanish Government’s Institute for the Diversification and Saving of Energy (IDAE) published a report analyzing the country’s wind resources [10]. The atlas addressed the offshore wind resources, based on a previous assessment of the suitable locations carried out by the Ministry of Agriculture and the Ministry of Industry, which is called the Strategic Environmental Study of the Spanish Coast for offshore wind farms [34]. Of the entire coastline, only 8.15% of this has a depth shallower than 50 m. The atlas also provides information on the suitability of the site to host offshore wind farms, subject to environmental and maritime restrictions (Tables 2 and 3). The country’s coast is divided into several areas, and these are characterized as follows: Figure 1. Offshore wind farm locations and mean wind speed [32]. The wind resource characteristics and restrictions in each area are detailed in the next section. Different levels of wind power capacity are assumed for these locations, and the effect on the daily electricity market is evaluated using the hourly information retrieved from the Iberian market operator (OMIE) [33]. 2.1. Offshore Wind Locations in Spain and Wind Resource Analysis In 2011, the Spanish Government’s Institute for the Diversification and Saving of Energy (IDAE) published a report analyzing the country’s wind resources [ 10 ]. The atlas addressed the offshore wind resources, based on a previous assessment of the suitable locations carried out by the Ministry of Agriculture and the Ministry of Industry, which is called the Strategic Environmental Study of the Spanish Coast for offshore wind farms [ 34 ]. Of the entire coastline, only 8.15% of this has a depth shallower than 50 m. The atlas also provides information on the suitability of the site to host offshore wind farms, subject to environmental and maritime restrictions (Tables 2and 3). The country’s coast is divided into several areas, and these are characterized as follows: • Suitable areas, which meet all the necessary characteristics for the installation of offshore wind farms, without prejudicing the environmental impact. • Suitable areas with environmental restrictions. These are areas where the development of offshore wind farms requires a detailed environmental assessment. • Excluded areas, where the installation of offshore wind farms is not permitted for environmental reasons or other marine uses. Energies 2021,14, 4481 6 of 17 Table 2. Breakdown of marine surfaces for offshore wind farms [10]. Areas Surface (km2)Surface (%) Suitable 84,666 36.8 Suitable areas with environmental restrictions 89,759 39 Excluded areas 55,889 24.3 Total 230,314 100 Table 3. Annual average wind speeds in suitable locations and in areas with constraints for offshore wind farms [10]. Wind Speed (m/s) at 80 m Surface (km2)Surface (%) 7.5–8.0 28,169 16.15 8.0–8.5 13,652 7.83 8.5–9.0 10,517 6.03 9.0–9.5 10,264 5.88 9.5–10.0 6617 3.79 >10.0 2331 1.34 Total 71,550 41.00 The surface with a sufficient wind speed (greater than 7.5 m/s at 80 m) can be seen in Table 3(71,550 km2, 41% of the surface not excluded). Figures 2and 3gather information regarding the suitability of the areas to host wind farms and the characteristics of the wind speed, provided by the Strategic Environmental Study of the Spanish Coast [ 34 ] and the Global Wind Atlas [ 32 ]. The four locations were chosen to locate floating offshore wind farms, which correspond to areas where the wind resource is abundant. The figure also highlights large areas with environmental protection or with certain types of restrictions for the installation of offshore wind farms. The effect on the market will be more significant when more renewable energy solutions are available. Therefore, it is necessary to estimate the wind resources in the locations suitable for the installation of wind farms. As can be seen in Figures 2and 3, the wind resource at each location has different characteristics in terms of the predominant wind direction and the hours in the day when the highest mean wind speed occurs. The temporal plots shown in Figures 2and 3have a variable called the wind speed index (the hourly mean wind speed divided by the 10-year mean wind speed at that point). The wind speed index provides information on the mean wind speed during a specific period by comparison with the normal wind speed. A wind speed index larger/smaller than one means that the wind speed in the analyzed period has been on average greater/less than normal. Normal is defined as the mean wind speed over a long period (from 2008 to 2017). In Figure 2, for location 1 (north coast of Galicia), the most frequent wind direction is from the east. The wind reaches a higher speed during the day from 12 to 19. Regarding location 2 (west coast of Galicia), the wind blows more frequently from the north, and the wind speed is higher from 14:00 to 00:00. In Figure 3, with regard to location 3 (west coast of Andalusia), the wind blows more frequently from the east. Here, the higher wind speed is evident during the night from 22:00 to 03:00. Regarding location 4 (north coast of Catalonia), the wind comes mainly from the northwest, and the wind speed is higher from 18:00 to 00:00. In the case of locations 2, 3, and 4, there are more wind resources during the afternoon or evening. The Spanish Energy and Climate Plan establishes that photovoltaic solar energy should be increased by 30 GW by 2030. Therefore, there would be a certain complementarity between the two technologies. Energies 2021,14, 4481 7 of 17 Energies 2021, 14, x FOR PEER REVIEW 7 of 18 Figure 2. (a) North coast of Galicia and (b) west coast of Galicia. Excluded, conditioned, and suitable areas for offshore wind generation (northwest of Spain). Mean wind speed at 100 m, frequency rose, and hourly wind speed index. Adapted from [32] and [34]. Figure 3. (c) West coast of Andalusia and (d) north coast of Catalonia. Excluded, conditioned, and suitable areas for offshore wind generation (southwest and northeast of Spain). Mean wind speed at 100 m, frequency rose, and hourly wind speed index. Adapted from [32] and [34]. In Figure 3, with regard to location 3 (west coast of Andalusia), the wind blows more frequently from the east. Here, the higher wind speed is evident during the night from Figure 2. ( a ) North coast of Galicia and ( b ) west coast of Galicia. Excluded, conditioned, and suitable areas for offshore wind generation (northwest of Spain). Mean wind speed at 100 m, frequency rose, and hourly wind speed index. Adapted from [32,34]. Energies 2021, 14, x FOR PEER REVIEW 7 of 18 Figure 2. (a) North coast of Galicia and (b) west coast of Galicia. Excluded, conditioned, and suitable areas for offshore wind generation (northwest of Spain). Mean wind speed at 100 m, frequency rose, and hourly wind speed index. Adapted from [32] and [34]. Figure 3. (c) West coast of Andalusia and (d) north coast of Catalonia. Excluded, conditioned, and suitable areas for offshore wind generation (southwest and northeast of Spain). Mean wind speed at 100 m, frequency rose, and hourly wind speed index. Adapted from [32] and [34]. In Figure 3, with regard to location 3 (west coast of Andalusia), the wind blows more frequently from the east. Here, the higher wind speed is evident during the night from Figure 3. ( c ) West coast of Andalusia and ( d ) north coast of Catalonia. Excluded, conditioned, and suitable areas for offshore wind generation (southwest and northeast of Spain). Mean wind speed at 100 m, frequency rose, and hourly wind speed index. Adapted from [32,34]. Energies 2021,14, 4481 8 of 17 In addition to the information provided by the Global Wind Atlas, hourly wind data are necessary, as wholesale energy prices and traded energies are determined hourly. For this purpose, we use the hourly wind data estimated from marine buoys and measurement towers located along the entire coast of the country (Spanish ports, [ 35 ]). Figure 4summa- rizes the procedure followed in this work. Firstly, once the location of the four wind power plants has been set, the local wind speed time series from the Spanish ports [ 35 ] and the considered wind turbine power curve, P T (v), have been used to estimate the hourly energy production, EA,h, corresponding to the array, A, and the hour, h, as follows: EA,h=NT·(1−pL)·EA,T,h=NT·(1−pL)·Zt=h+1 t=hPT(vA(t)) ·dt. (1) Energies 2021, 14, x FOR PEER REVIEW 8 of 18 22:00 to 03:00. Regarding location 4 (north coast of Catalonia), the wind comes mainly from the northwest, and the wind speed is higher from 18:00 to 00:00. In the case of locations 2, 3, and 4, there are more wind resources during the afternoon or evening. The Spanish Energy and Climate Plan establishes that photovoltaic solar energy should be increased by 30 GW by 2030. Therefore, there would be a certain complementarity between the two technologies. In addition to the information provided by the Global Wind Atlas, hourly wind data are necessary, as wholesale energy prices and traded energies are determined hourly. For this purpose, we use the hourly wind data estimated from marine buoys and measurement towers located along the entire coast of the country (Spanish ports, [35]). Figure 4 summarizes the procedure followed in this work. Firstly, once the location of the four wind power plants has been set, the local wind speed time series from the Spanish ports [35] and the considered wind turbine power curve, P T (v), have been used to estimate the hourly energy production, E A,h , corresponding to the array, A, and the hour, h, as follows: 1 ,,, ·(1 ) (1 ) ( ( )) th Ah T L AT h T L T A th EN pE N p Pvtdt =+ = =−⋅=⋅−⋅ ⋅ . (1) In this expression, N T is the considered number of turbines of each array, p L represents the relative total losses of the array (wake losses and electrical loses in the inner electricity infrastructure), and E T,h is the hourly energy produced by one turbine per hour, h. Figure 4. Graphic representation of the procedure for estimating the impact of the offshore wind generation on the day-ahead electricity market. Subsequently, the aggregate hourly quantity of wind energy at the national level, ΔE W,h , that is integrated into the market is estimated as: ,, 1 A N Wh Ah A EE = Δ=  (2) where N A represents the considered number of arrays. 2.2. Offshore Wind Energy Integration in the Iberian Market The basic information used in this work to determine the effects of the integration of the offshore wind energy in the Iberian day-ahead market includes the hourly curves of generation and demand, which are ranked by the price for the year 2019 (365 daily markets, with thousands of production and demand bids in each daily market, resulting in 8760 hourly demand and generation curves, each with a thousand bids). These data can be obtained from the Iberian market operator, OMIE [33]. A large number of daily markets (numerous production and demand bids) renders it convenient to consider a certain level of simplification, so as to reproduce the market operation. The Iberian market is driven by a complex process of optimization of economic welfare in order to determine the market-clearing point (clearing price and traded energy). To model the operation of the day-ahead electricity market, using such broad scenarios as those considered in this work (one whole year), the existing literature has used Figure 4. Graphic representation of the procedure for estimating the impact of the offshore wind generation on the day-ahead electricity market. In this expression, N T is the considered number of turbines of each array, p L represents the relative total losses of the array (wake losses and electrical loses in the inner electricity infrastructure), and ET,his the hourly energy produced by one turbine per hour, h. Subsequently, the aggregate hourly quantity of wind energy at the national level, ∆EW,h, that is integrated into the market is estimated as: ∆EW,h= NA ∑ A=1 EA,h(2) where NArepresents the considered number of arrays. 2.2. Offshore Wind Energy Integration in the Iberian Market The basic information used in this work to determine the effects of the integration of the offshore wind energy in the Iberian day-ahead market includes the hourly curves of generation and demand, which are ranked by the price for the year 2019 (365 daily markets, with thousands of production and demand bids in each daily market, resulting in 8760 hourly demand and generation curves, each with a thousand bids). These data can be obtained from the Iberian market operator, OMIE [ 33 ]. A large number of daily markets (numerous production and demand bids) renders it convenient to consider a certain level of simplification, so as to reproduce the market operation. The Iberian market is driven by a complex process of optimization of economic welfare in order to determine the market-clearing point (clearing price and traded energy). To model the operation of the day-ahead electricity market, using such broad scenarios as those considered in this work (one whole year), the existing literature has used different approaches, such as the linearization of the market around the clearing point [ 29 , 36 , 37 ]. Research based on a market model, using the detailed composition of the generation and demand curves, can be found in [ 30 , 38 – 40 ]. The latter methodology has been adopted in this work, which requires very detailed information of the composition of generation and demand curves. Our approach is based on a ceteris paribus assumption, keeping constant all factors except the generation curve, which is modified to integrate the offshore wind Energies 2021,14, 4481 9 of 17 production bids. Subsequently, the new hourly prices of traded energy and clearing are recalculated for each hour of the year. For every potential offshore scenario, a new hourly merit-order generation curve is produced by first adding the hourly energy bids of offshore generators and re-elaborating the corresponding hourly merit-order generation curves. Renewable generators usually offer their energy at (zero or) at a very low price (closely related to their maintenance costs and generally well below the clearing price) in order to guarantee their participation when the energy resource is available, and their fuel costs are zero. Once the generation curve was modified, including the offshore generation bids, the new clearing point (W W ,p W ) is determined as the intersection of the new supply ( pGW =pGW(W) ) and the original demand curves (p D =p D (W)). For example, Figure 5 shows the quantity of offshore wind generation, ∆ E W , at zero cost and the original hourly merit-order generation (p G =p G (W)) and demand (p D =p D (W)) curves retrieved from the OMIE. Since renewable generators offer their energy at zero price, the original bids corresponding to the renewable generators can be found in the initial flat region (first steps) of the aggregated generation curve. The original renewable generation bids are now increased until the targeted amount ( ∆ E W ) is reached. The new aggregated generation curve, pGW =pGW(W) , essentially results in a right-shifting of the initially cleared supply curve, by an amount equal to ∆ E W . Finally, the new clearing point (B in Figure 5) can be determined as the crossing point of the new right-shifted generation curve, pGW =pGW(W) , with the original demand curve, p D =p D (W). It is important to emphasize that this approximate clearing method retains the stepped characteristic of the curves. Energies 2021, 14, x FOR PEER REVIEW 9 of 18 different approaches, such as the linearization of the market around the clearing point [29,36,37]. Research based on a market model, using the detailed composition of the generation and demand curves, can be found in [30,38–40]. The latter methodology has been adopted in this work, which requires very detailed information of the composition of generation and demand curves. Our approach is based on a ceteris paribus assumption, keeping constant all factors except the generation curve, which is modified to integrate the offshore wind production bids. Subsequently, the new hourly prices of traded energy and clearing are recalculated for each hour of the year. For every potential offshore scenario, a new hourly merit-order generation curve is produced by first adding the hourly energy bids of offshore generators and re-elaborating the corresponding hourly merit-order generation curves. Renewable generators usually offer their energy at (zero or) at a very low price (closely related to their maintenance costs and generally well below the clearing price) in order to guarantee their participation when the energy resource is available, and their fuel costs are zero. Once the generation curve was modified, including the offshore generation bids, the new clearing point (WW,pW) is determined as the intersection of the new supply (pGW = pGW(W)) and the original demand curves (pD = pD(W)). For example, Figure 5 shows the quantity of offshore wind generation, ΔEW, at zero cost and the original hourly merit-order generation (pG = pG(W)) and demand (pD = pD(W)) curves retrieved from the OMIE. Since renewable generators offer their energy at zero price, the original bids corresponding to the renewable generators can be found in the initial flat region (first steps) of the aggregated generation curve. The original renewable generation bids are now increased until the targeted amount (ΔEW) is reached. The new aggregated generation curve, pGW = pGW(W), essentially results in a right-shifting of the initially cleared supply curve, by an amount equal to ΔEW. Finally, the new clearing point (B in Figure 5) can be determined as the crossing point of the new right-shifted generation curve, pGW = pGW(W), with the original demand curve, pD = pD(W). It is important to emphasize that this approximate clearing method retains the stepped characteristic of the curves. Figure 5. Hourly aggregated generation, pG = pG (W), and demand, pD = pD (W), curves and elaboration of the new right-shifted generation curve, pGW = pGW (W), integrating an amount of new offshore wind production, ΔEW (selling bids at zero price). Figure 5 shows how the integration of the offshore generation bids leads to an appreciable reduction in the clearing price and a slight increase in the energy traded in the market (rebound effect). As a result, the cost of the energy traded in the market (the Generation curve Demand Curve p G (W) p D (W) 010203040506070 Energy (GWh) 0 20 40 60 80 100 120 140 160 180 200 Price (€/MWh) p GW (W) A B W i p i ΔE w Δp ΔW Offshore generation C W W p W Figure 5. Hourly aggregated generation, p G =p G (W), and demand, p D =p D (W), curves and elaboration of the new right-shifted generation curve, p GW =p GW (W), integrating an amount of new offshore wind production, ∆EW(selling bids at zero price). Figure 5shows how the integration of the offshore generation bids leads to an appreciable reduction in the clearing price and a slight increase in the energy traded in the market (rebound effect). 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