Government eases path for 3.5GW Dutch offshore bids

NETHERLANDS: With around 1GW of offshore wind power now operating or under construction off the Dutch coast, including the 600MW Gemini project due online in 2017, companies are gearing up to submit bids for the next round of offshore projects planned by the Dutch government.

Offshore expansion - The Dutch plan is to push out offshore capacity by 700MW a year (pic: Eneco)
Offshore expansion - The Dutch plan is to push out offshore capacity by 700MW a year (pic: Eneco)

Under its national energy agreement for sustainable growth, some 3.5GW of new offshore capacity, to be developed across three designated zones, will be opened up to tender over the next five years, all to be online by 2023.

"The Dutch have a clear roll-out plan for the development of offshore wind, and the authorities have the necessary legislation in place," said Rune Birk Nielsen of developer Dong Energy.

The first of five annual 700MW competitive tenders will officially open in December, when companies will be able to download all the relevant application documents from the Netherlands Enterprise Agency's website. In each tender, two 350MW projects will be opened to competitive bids. With all eligible bids having to meet the specified requirements, winning bidders will be selected on price.

The winners will secure permits to build, own and operate a project, along with subsidy grants under the stimulation of sustainable energy production (SDE+) programme.

Driving down costs

The two 350MW projects in this year's initial tender are planned for sites I and II of the Borssele zone, located at the southern border of the Dutch exclusive economic zone (EEZ), 0.5 kilometres from the Belgian EEZ. Under the government's timetable, projects must be operational within five years of a permit being granted.

After consultation with the industry, the Dutch authorities have tried to remove many of the cost and time barriers for developers looking to bid to build and operate the projects, said Rene Moor, programme leader for offshore wind energy at the Dutch economic affairs ministry.

"Thanks to the Offshore Wind Energy Act, we provide a stable framework which reduces risk-associated costs," Moor said.

For each tender the government is taking on the burden of preparing all the site data required to help with bids, including the environmental impact assessment. The final project and site description for the Borssele sites I and II is already online at the Netherlands Enterprise Agency website. National transmission system operator Tennet is responsible for the grid network.

"This is expected to lead to an efficient roll-out of this scheme," Moor said. "Another benefit is that the winner of the tenders will gain an SDE+ grant and a full permit to build and operate straight away." Subsidies are paid for a period of 15 years per project under the SDE+ framework, and the 30-year project permits include time for financial close, building and decommissioning.

Streamlining the process has helped drive interest in the Dutch offshore wind programme. "Conditions on the Dutch North Sea are good for offshore wind, with good wind speeds and soil conditions," said Dong's Birk Nielsen, referring to two key factors that will improve the overall economics of planned projects in the area.

Built-in flexibility

While the government specifies where wind farms can be built, issuing a so-called wind farm site decision (WFSD) outlining the general conditions for building and operating a project on a specific site, there is built-in flexibility. Developers are free to choose the type of turbine (up to 10MW), foundation structure, array layout and other factors as long as their plans meet the WFSD.

By building in this flexibility while alleviating much of the pre-construction cost burden and assuming responsibility for the grid, the Dutch government expects to see offshore wind costs fall by 40% by 2024. To ensure this, prices are capped under the SDE+ renewable energy incentive mechanism (see table, below). For Borssele sites I and II the price is capped at €0.124/kWh.

Bid submissions for the Borssele sites I and II tender must be delivered in person to the agency's office in Zwolle no later than 31 March 2016, 5pm (CEST).

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