Vattenfall wins Dutch zero-subsidy offshore wind tender

Swedish group named as successful bidder for 700–750MW Hollandse Kust South 1&2 sites after world-first process with no support on offer

Swedish utility Vattenfall via the Chinook unit of its Dutch subsidiary Nuon has won the keenly-watched tender to build wind farms in the 700–750MW Hollandse Kust South 1&2 sites and operate them for 30 years.

“This is excellent news for Vattenfall and the Netherlands. It is a significant step for us in view of our ambitions to grow in renewable energy production. The Netherlands is an important market for us and this will be our second offshore project there,” Vattenfall chief executive Magnus Hall said.

The company had previously announced that it intends to invest SKr13bn ($1.6bn) in so-called ‘growth investments’ in wind power for the period 2017-2018.

According to the tender rules, the wind farm needs to be fully operational within five years after an irrevocable permit, which the Dutch government says is in 2022.

“Thanks to drastically lower costs, offshore wind farms are now being constructed without subsidy. This allows us to keep the energy transition affordable. Innovation and competition are making sustainable energy cheaper and cheaper, and much faster than expected too,” Dutch economic affairs and climate minister Eric Wiebes said.

WindEurope CEO Giles Dickson said: “This news shows zero-subsidy bids are possible for some developers in some markets, not least where governments take on and manage a share of the project risk. In this instance the Dutch government taking care of the grid connection is a significant factor.

“Plus the Dutch government has successfully minimised the risk linked to offshore wind by giving clear visibility about future market volumes. And the new Dutch government has committed to bring in a carbon floor price at national level which will help the business case for offshore wind.”

Vattenfall bid means zero-subsidy offshore wind is here to stay

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Dickson added: “Wind energy is showing again and again that it can deliver ever more capacity for less cash. That’s the key message other governments should take from this: they should revise their ambition upwards in their national energy plans and offshore wind is a great way to help them do this.”

Vattenfall said it will now make the final preparations for the project including the design of the wind farm, continuation of the internal planning and finalising the tender process for major components.

The tender has been closely watched in the industry, as it is the first one that only accepted bids without support – unlike in Germany’s first offshore wind tender last year, which resulted in 1.38GW in acreage won by projects not bidding for any subsidies in a tender where the lowest price was still the main criterion.

In the Dutch zero-subsidy tender, however, the main criteria were the timely construction of the wind farm, the quantity of energy produced and sound risk management. The Dutch economics ministry said Nuon had received the highest score for those criteria with its plan for Hollandse Kust South 1&2.

The auction for Hollandse Kust South 1&2 was the third in a series of five auctions with the ambition to add a combined 3.5GW, and bring the Netherland’s offshore wind capacity to a total of 4.5GW by 2023. The Hollandse Kust South 1&2 sites are located off the Dutch province of South Holland, and adjacent to the already operating 129MW Luchterduinen offshore wind farm.

The Netherlands as part of the current series of tenders in recent years has already allocated the 752MW Borssele 1&2 sites to Danish utility Orsted at a support level of €72.70 ($89.6), and the 731MW Borssele 3&4 sites to a consortium including private equity fund manager Partners Group, oil major Shell, Japanese conglomerate Mitsubishi, utility Eneco and contractor Van Oord at €54.50/MWh.

Orsted decided to stay out of the Hollandse Kust South 1&2 running, as did German utility EnBW which was at one stage touted as a possible bidder. Norwegian oil and gas group Statoil was a confirmed bidder in the process.

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