  Taking concrete steps towards a carbon-free society, the Danish Parliament
has recently made an agreement on the establishment of the world's first two
offshore energy hubs, one on the island of Bornholm and one on an artificial
island in the North Sea. Being the two first-of-their-kind projects, several
aspects related to the inclusion of these "energy islands" in the current
market setup are still under discussion. To this end, this paper presents the
first large-scale impact analysis of offshore hubs on the whole European power
system and electricity market. The detailed models used for such analysis are
publicly released with the paper. Our study shows that energy hubs in the North
Sea have a positive impact, and overall increase economic welfare in EU.
However, when considering the impact on each country, benefits are not shared
equally. In order to help the development of such projects, we focus on the
identification of market challenges and system needs arising from the hubs.
From a market perspective, we show how exporting countries are negatively
affected by the lower electricity prices and we point at potential strategic
behaviors induced by the large amount of new transmission capacity installed in
the North Sea. From a system point of view, we show how the large amount of
wind energy stresses conventional generators, which are required to become more
flexible, and national grids, which cannot always accommodate large imports
from the hubs.
