Delft, The Netherlands,
12
March
2018
|
12:08
Europe/Amsterdam

Dutch government assessing tender bids Hollandse Kust Zuid

Dutch government assessing tender bids Hollandse Kust Zuid

The world’s first ‘zero-subsidy’ tender procedure for ‘Hollandse Kust Zuid I&II’ (HKZ I&II) closed last December and the Dutch government is now assessing the bids. Multiple companies are competing to develop this wind farm: Vattenfall, Statoil and Innogy (Essent) are all in the game for this zero-subsidy tender. It is not the first time zero-subsidy bids were submitted in an offshore wind energy tender: last year Ørsted and Energie Baden-Württemberg won an auction in Germany with subsidy-free bids. This prompted the Dutch government to start this new tender procedure.

 

Lower costs and a higher energy price

Which factors may have contributed to the decision for a subsidy-free tender? Obviously, public money would be saved. However, without subsidy, a wind farm is only profitable if the costs are below the market price for electricity per kWh. Developers will only submit subsidy-free bids when this is a realistic scenario.

In the case of HKZ I&II, recent developments contribute to the likelihood of this scenario. Firstly, over the past years, technological improvements have resulted in more efficient wind turbines, i.e. lower power production costs. Secondly, when HKZ I&II is operational in 2020, the average market price for electricity is expected to be higher. One of the reasons for this is the new carbon fee system, that is expected to launch in 2020. Also, the infrastructure for this wind farm is realised by the grid operator instead of the developer, which reduces the costs with 1.4-1.6 c/kWh. Lastly, the site conditions for the planned wind farm are favourable for cost reductions. The sites are close to shore, have a relative shallow depth suited for monopiles and wind conditions are good, again leading to lower installation and production costs.

Decisive criteria

For the zero-subsidy wind farm, no longer the lowest price, but rather the quality of the bidding party will be the deciding factor for winning the tender. They will be evaluated on the basis of six criteria set out in the Offshore Wind Energy Act:

  1. The knowledge and experience of the parties involved

  2. The quality of the design for the wind farm

  3. The capacity of the wind farm

  4. The public costs/efficiency of the wind farm

  5. The identification and analysis of the risks involved by the tenderer

  6. The measures that the tenderer will take to safeguard cost effectiveness

Winner

Although the Dutch government was uncertain if they would get bids for this tender, multiple applications where submitted. These are currently being assessed a team of independent experts. Who is going to win this tender? The government will announce the award decision on the 19th of March 2018 after 17.30 CET.