FuelEU Explainer: Obligations and Opportunities of Onshore Power

This is the third article of our series on FuelEU Maritime Regulation from the Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping (MMMCZCS). We will share the latest analysis, strategic insights, and practical tools for organizations to leverage FuelEU for achieving decarbonization goals.

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Explore previous articles and understand the basics of the regulation on our FuelEU page.

Container and passenger ships subject to FuelEU Regulation will be required to use Onshore Power Supply (OPS) or an equivalent zero-emissions technology by 1 January 2030. Until then, all ships subject to the regulation can benefit from using OPS to meet yearly GHG intensity targets. We explore the future of OPS under EU regulations and provide a calculator to estimate the potential of using OPS to meet FuelEU compliance targets.

OPS, also known as ‘cold ironing,’ supplies electricity to ships moored in port, replacing the use of auxiliary engines that typically generate power. In some cases, OPS is also used to charge onboard batteries for electricity uses or even propulsion. It is seen as a way to lower GHG emissions and to improve the local environment at ports by reducing air and noise pollution. It also offers other benefits such as less wear and tear of the engine, thereby extending the lifespan and efficiency of machinery.

OPS provides power for a range of electricity uses onboard, including heating and cooling cargo, running pumps, and cargo handling. It also supports the “hotel load” — power consumed by facilities and amenities for crew and passengers. For passenger ships, the hotel load is a significant share of onboard energy, particularly for cruise ships with an average hotel load of 40% of energy demand.

OPS has GHG emissions if the electric grid uses fossil fuels like coal or natural gas. However, the EU electricity mix is becoming cleaner with roughly 50% reduction in GHG intensity between 1990 and 2022.

The emissions intensity of the grid is expected to further decrease in the coming years as the EU sets out to meet the Fit for 55 legislation’s target of reducing GHG emissions by at least 55% of 1990 levels by 2030. To meet this target, a key strategy will be to electrify more end uses such as heating and automotive. Therefore, the power sector will need to decarbonize faster than other sectors for the increase in electricity use to meaningfully reduce emissions. The European Environment Agency estimates that by 2030, the grid will need to reduce intensity by roughly 80% of 1990 levels in order for the EU to reach the goal of 55% total GHG reduction.

Supply-side policies at both the member state level and at the EU, including the Renewable Energy Directive, target increasing renewable power to achieve the ambitious EU goal. Using OPS from cleaner electricity grids — those with a larger share of low- or zero-emissions renewables in their energy mixes — such as Denmark and Sweden — offers more immediate and significant emissions reductions.

EU regulation, adapted under the Fit for 55 program, is focused on OPS for container and passenger ships because these segments produce the highest emissions per ship. Two regulations will drive adoption of OPS for these segments:

1. Supply-side: Alternative Fuels Infrastructure Regulation (AFIR)
   
   By 31 December 2029, major coastal and inland ports on the Trans-European Networks (TEN-T) must have OPS available for container and passenger ships, as per AFIR Article 9. Out of the 329 designated TEN-T sea ports, those with a sufficient volume of traffic (100 port calls for container ships, 40 port calls for RoPax, or 25 port calls for Ro-Ro and high-speed passenger ships on an average over the last 3 years) are required to provide OPS for at least 90% of port calls by container and passenger ships above 5,000 GT. Additionally, the AFIR regulation calls for further development of uniform technical standards for OPS technologies, including batteries, across ports (AFIR Annex II(5)), thus addressing issues of incompatible systems.
   
   
2. Demand-side: FuelEU Maritime Regulation (FuelEU)
   
   According to FuelEU Article 6(1), from 1 January 2030, container and passenger ships over 5,000 GT moored for more than two hours in TEN-T ports, which satisfy AFIR Article 9 conditions outlined above, must use OPS to meet all their electric power demand while moored. Exceptions to the requirement, listed in Article 6(5), are made for emergencies, unplanned port visits, unavailability or incompatibility of OPS, and for instances when the ship already uses zero-emission technologies (such as onboard fuel cells) which meet the technology requirements in Annex III (see below). By 1 January 2035, these exemptions will be narrowed, particularly those concerning the availability of OPS. Additionally, container and passenger ships will be required to plug in at any port equipped with OPS, even if the port is not one of the designated TEN-T ports under AFIR Article 9 (Fuel EU Article 6(2)). Noncompliance with OPS requirements will lead to a penalty based on the noncompliant energy consumed and will be recorded into the FuelEU Database by the competent authority of the Member State.

In addition to using OPS to meet their obligations under FuelEU Article 6, ships can use ‘zero-emissions technologies’ listed in FuelEU Annex III. To be eligible, the technology must not release any GHGs or air pollutants per FuelEU Article 3(7). Currently, the technologies permitted are fuel cells, onboard battery storage, and onboard power generation from wind and solar energy. Of these, the use of batteries is the most advanced, as over 20% of the roughly 1,400 ships powered by alternative fuels in global orderbooks are for battery/hybrid propulsion. However, new innovations including fuel cell technologies could increase the relevance of other alternatives to meet OPS obligations.

The European Commission will adopt implementing acts on the criteria for the acceptance of zero-emission technologies. The latest timeline from DG MOVE estimates public consultation will take place in the third quarter of 2024 with adoption in the fourth quarter. In the future, the Commission may add other technologies to the list through delegated acts.

Apart from the 2030 requirement for passenger and container ships, all ships over 5,000 GT sailing to EU ports from 1 January 2025 will have the opportunity to use OPS towards FuelEU intensity targets.

Under FuelEU Article 4, intensity reduction mandates cover all energy used onboard including while at berth. Therefore, utilizing OPS for electrical needs or propulsion can reduce the intensity of energy consumed. Per Annex I, the regulation considers OPS as having zero GHG intensity, regardless of the emissions of the electricity grid. As battery technology matures, fully electrified shipping, such as ferries and short sea shipping, can generate significant compliance surplus which can be sold in a pool to offset high costs (see previous newsletter on the value of pooling).

OPS FuelEU Compliance Calculator

To support companies considering using OPS for compliance with FuelEU, we are providing a calculator. This tool helps evaluate the economic benefits of using OPS to comply with FuelEU targets.

To use the calculator, begin by entering fuel and electricity consumption data. You can use our standard costs or input your own. The results show annual energy costs and the potential for OPS to reduce FuelEU and EU ETS costs, supporting decision-making on integrating OPS.

Download the Excel OPS calculator

Note that this calculator should not be construed as investment, financial, legal, tax, or accounting advice. Please question the assumptions before incorporating them into your company’s decision-making process. This calculator is provided without warranty or representation of any kind, express or implied, and Fonden Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping shall not be held liable for any errors or omissions in the content, nor for any loss or damage arising from the use of it.

Successful Demonstration: Plug, an onshore power supplier in Norway, has demonstrated successful OPS implementation. Their pilot project, which began in 2015 in partnership with the Port of Bergen, has since expanded to include multiple OPS systems, thereby demonstrating a growing interest in OPS. Port of Hamburg officials are also expanding their OPS network across large container terminals and cruise centers. Additionally, projects like the ferry retrofitting project between Denmark and Sweden, which was co-funded by the EU, have reduced GHG emissions by 65%. Such projects highlight the potential for OPS to provide valuable emissions reductions benefits to help shipping companies and ports achieve climate and environmental goals.

Public Funding: Public funding schemes like Enova in Norway and the European Commission’s Connecting Europe Facility (CEF) play a crucial role in facilitating OPS adoption by providing funds to partially cover installation costs. A group of ports in Northern Europe are collaborating on CEF grant funding applications for onshore power-related funds. The European Commission also offers funds to pilot projects for research and innovation. On the demand side, incentives by ports and local authorities — such as lowering port fees and offering tax breaks for ships using OPS — can encourage ship owners to invest in the technology.

Technological Advancements: OPS can support the development of necessary infrastructure for electrification of shipping, particularly short sea shipping. The advancement of battery-electric cargo ships, such COSCO's electric containership launched in 2023, show an opportunity for OPS infrastructure to not only replace fuel burned in port, but also to support the electrification of propulsion.

Long-Term Viability: In a future scenario when ships can run on e-fuels, OPS is likely to remain a cost-effective way to reduce emissions at berth. A 2023 study found that OPS costs less than e-fuels. This is partly because the use of fuels to generate electricity leads to higher efficiency losses than powering systems directly from the electric grid.

Thanks to Thomas Edelgaard Christensen and Cecilie Vestergaard at Gorrissen Federspiel for their input and review of the content.

• Shipping reacts to alternative maritime fuels being added to the list of strategic technologies in the Net-Zero Industry Act
• Explainer: How ports and shipowners can apply for Connecting Europe Facility funding for projects including OPS
• Dutch port engages ABB to install shore power for offshore vessels
• Antwerp receives EU shore power grant for cruise vessels
• San Diego launches the US’ first all-electric tug boat
• Interview: GMF’s Jesse Fahnestock on the EU and IMO’s promise to tighten rules
• Podcast: How the Jones Act of 1902 distorts US shipping and slows the transition

• In case you missed it, we recently released the Fuel Cost Calculator, which allows users to calculate bottom-up production cost of sustainable fuels and benchmark them against the cost of fossil fuels

• The Center’s Claus Graugaard discusses ammonia as a promising alternative fuel in an interview on the DW Planet A channel

• Explore previous editions and the basics of FuelEU on our dedicated page

The European Commission has a dedicated helpdesk for EU ETS and FuelEU: fitfor55@emsa.europa.eu

• Text of FuelEURegulation
• Text of AFIRRegulation
• ‘Preparing for FuelEU’ Webinar
• Transatlantic Testing Ground report on EU & US policy impacts
• A submission to MEPC 80 on the role of OPS in the future energy mix