The UK's plans to explore greater use of on-shore power for moored vessels in UK ports to slash emissions could come with a significant price tag.
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Shore power will be vital to decarbonizing the maritime sector, the government said in a statement Feb. 7.
This implies a considerable increase in demand for electrical power in a country with comparatively high electricity costs, besides the capital investment costs.
The key obstacle is capital costs and no shore power projects anywhere in the world have been undertaken without public support, the British Ports Association said in a May 2020 report. A green maritime fund to support shore power in the UK is therefore needed to meet prohibitive costs, the BPA report said.
The BPA cited examples including the Port of Hamburg, where a 33.5 MW capacity project in 2022 would cost Eur76 million ($87 million) and a 12.8 MW capacity project at Kiel in 2020 cost Eur15 million
Additionally, the call on electricity would be considerable.
In a business-as-usual scenario total UK port electricity demand is estimated to increase from approximately 20 GWh/year in 2016 to around 250 GWh/year by around 2050, a 2019 report by Frontier Economics commissioned by the department for transport said. This increase is estimated to be primarily from the uptake of shore power, with only a modest electrification of infrastructure in the port itself.
Under an ambitious decarbonization scenario this could rise to 4 TWh/year, the report said.
The price of electricity in the UK is much higher than in countries where shore power is provided, the BPA said in a May 2020 report. "Most ports with shore power provision have support to help make electricity as a marine fuel more competitive and that needs to be replicated in the UK," the BPA report said.
S&P Global Platts assessed the price of UK day-ahead baseload power at GBP168.00/MWh (Eur227.07/MWh) Feb. 4, versus Eur174.78/MWh in the Netherlands (Epex Spot exchange).
While the UK's premium to continental Europe ebbs and flows depending largely on the dynamics between UK wind and French nuclear generation, the dominant direction of flows on interconnectors is from the continent to the higher priced UK market.
Electricity is not currently price competitive to petroleum-based alternatives. According to S&P Global Platts calculations the UK price equates to $72.15/gigajoule. Platts assessed delivered 0.1% marine gasoil at Rotterdam at $18.58/GJ/cu m Feb. 4.
The BPA supports the plan to increase on-shore electrical power for ships, so they do not need to run their engines and burn petroleum-based fuels while in port. "The ports industry has a key role to play in supporting the decarbonisation of shipping and shore power will be an important part of that," Mark Simmonds, director of policy and external affairs for the British Ports Association, said about the UK scheme in the government statement on Feb. 7.
However, it is important to address demand in order to encourage supply, Simmonds said.
Additionally, securing the electric power for the transition to shore power is a "huge barrier," Simmonds added.
The UK is launching a call for evidence to gather information on shore power's benefits to the shipping sector, the government statement said.
S&P Global Platts Analytics assumes petroleum-based fuels in the shipping sector will be displaced entirely by 2050. It predicts that by 2050 ammonia will account for 20% of the order book of new vessels, hydrogen for 5%, methanol for 25%, biofuel for 10% and LNG for 40%.