Germany's energy regulator Bundesnetzagentur (BNA) is opting for a strict deadline system to solve the problem of which comes first in offshore wind development - cable connections by transmission system operators (TSOs) or wind project construction. "It's a so-called hen-and-egg problem," says the regulator. "One cannot go ahead without the other, but whoever moves first runs the risk of making a stranded investment if the other defaults."
Germany's TSOs are legally obliged to have a cable connection to shore completed by the time an offshore station is ready to operate. But with the cost for the cable passed on to consumers, they will only agree to proceed with a cable investment once there is proof a project will go ahead, including evidence of completed financing. Offshore developers, however, need a commitment from the responsible TSO that the cable connection to shore will be built so they can get financing.
To solve the impasse, BNA has ruled that TSOs must start tendering procedures for offshore cable connections on April 30 or October 31 of each year for all offshore wind projects that meet certain criteria by the previous March 1 or September 1, respectively.
The offshore project criteria include having a construction permit, a plausible construction schedule, completion of sea bed investigations for turbine foundations, binding contracts for turbine supply and financing for turbines scheduled to be installed during the first year of the project's construction. Alternatively, in place of a financial package, the developer can present a letter of intent on supply of vital large components, such as foundations, transformer station, transformer platform and cabling to connect turbines with the transformer station. But the letter must indicate there will be economic consequences if either party fails in its commitment.