Tenders worth 2GW signify real step toward offshore

FRANCE: France could be about to kick-start an offshore wind industry at last with the announcement of four projects that was awarded under a 3GW tender that was launched last July. The projects, with a combined capacity of nearly 2GW, represent an investment of €7 billion and will create 10,000 manufacturing jobs, said the government.

The decision "will lead to the development of a new industry with global ambitions ... and place France among the world leaders in the offshore wind industry," said industry minister Eric Besson.

The clear winner of the tender, with three projects totalling nearly 1.5GW, was the consortium led by EDF Energies Nouvelles (EDF EN) and also comprising Danish developer Dong Energy, French developer Nass & Wind Offshore and German developer WPD Offshore. Alstom will supply 240 of its new Haliade 150 6MW turbines to the consortium, an order worth over €2 billion. In the meantime, Alstom said it will invest around €100 million building four factories producing nacelles and generators at St-Nazaire and blades and towers at Cherbourg. The blades will be made in partnership with LM Wind Power and series production should start in 2014.

Low-cost bid

While the ten bids received were all of good quality, with strong supply-chain proposals, EDF EN offered the lowest purchase price in all cases, said the government. Nevertheless, it decided to award one project to Iberdrola and Eole-RES to "give a chance to a second consortium" and maximise benefits. The decision was based on Besson's belief "that a viable industrial sector must be supported by several structural players, [and] the industrial effort and therefore the risk should be spread across different operators".

Iberdrola and Eole-RES were awarded 500MW in partnership with Areva, French renewables firm Neoen Marine, UK engineering company Technip and South Korean Marine Engineering firm STX. Although it had been hoping for more, Areva confirmed that it will build two factories in Le Havre producing nacelles and blades for its 5MW turbine. STX will manufacture the jacket foundations in St-Nazaire and Technip will install the cables, foundations and turbines. Areva, like Alstom, will be banking on more orders in France and also targeting the export market to keep its factories running.

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Left out

This left the third consortium of GDF Suez with UK construction firm Vinci and French state-owned investment company Caisse des Dépôts et Consignations empty handed, despite bidding for four of the five projects tendered. In one case, Le Tréport, they were the only bidders, but the government decided to defer the project. "Because the zone did not attract sufficient competition, the purchase price of electricity is the highest among the five areas," the government said in justifying its decision. GDF Suez reportedly bid €220/MWh at Le Tréport, €45 above the government's ceiling price. As it is, the power prices for the four projects retained will add around €1.1 billion a year to electricity bills, said Besson.

GDF Suez will get another bite at the cherry when Le Tréport is put out to tender again in the second round. This was to have been launched in April for 3GW, but the government has pushed it back until after the summer. Although the first round only yielded 2GW, Besson says the target of 6GW will be achieved. It is not clear if the second round will be increased to 4GW, or more, or if there will be an additional call for tenders.

Meanwhile, there is still a long way to go before any turbines start turning in French waters. The winners of the first round now have 18 months to complete technical and financial feasibility studies and then have to go through the permitting process. Even if everything goes smoothly, it is unlikely any projects will be commissioned before 2017.

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