Two-step tender procedure for Dutch offshore wind announced

30 June 2017

Recent tenders for offshore wind farms in Germany caused a stir in the European wind sector as the winning contenders submitted a subsidy-free bid for three of the four German wind farms that were tendered. These developments led to uncertainties with respect to the applicable procedure for Dutch offshore wind tenders. In a letter of the Dutch Minister of Economic Affairs that was sent yesterday (28 June 2017) to the Dutch Parliament the minister sets out the applicable procedure for the upcoming offshore wind tender in the Netherlands "Hollandse Kust (Zuid)", sites I and II.

The minister announced in his letter that the tender for Hollandse Kust (Zuid), sites I and II will be organized in two rounds. The first round will be based on the zero-subsidy procedure that is laid down in the Dutch Offshore Wind Energy Act. If two or more bids without subsidy would meet the general requirements these bids will be ranked on the basis of six qualitative criteria that are set out in Article 24 of the Dutch Offshore Wind Act:

  • The knowledge and experience of the parties involved;
  • The quality of the design for the wind farm;
  • The capacity of the wind farm;
  • The social cost;
  • The quality of the assessment and analysis of the risks;
  • The quality of the measures to ensure cost-effectiveness.

If the zero-subsidy procedure will not result in a winning bid, the next round will be initiated based on the regular procedure where also a subsidy is awarded. This is the system that was applied in the previous Dutch offshore wind tenders: if two or more bids meet the general qualifications the contender that submits the lowest cost per kWh will be the winning bid.

As is also noted by the minister in his letter, the background and characteristics of the upcoming Dutch offshore wind tenders differ significantly from that of the recent German tenders where zero-subsidy bids were submitted. Among others the German wind farms have a longer time horizon to benefit from technological progress, as they have a date of operation that is two or three years later than the dates that apply to the Dutch wind farm tenders. Furthermore, the wind speeds near the German locations are substantially higher than the wind speeds at the location of the Hollandse Kust (zuid), sites I and II. However, as zero-subsidy bids cannot be ruled out in the Dutch tender, the Minister is keen to avoid that subsidy will be paid unnecessarily.

Due to the two-step approach that is proposed by the minister the initial timetable for the tender planned in September will probably not be met. The minister mentions in his letter that in the coming months the criteria that apply to the zero-subsidy procedure will be set out in more detail. One would expect that consultation with the industry may be necessary for establishing the detailed assessment criteria and weighting factors for the zero-subsidy procedure. Nevertheless, the minister still expects the tender Hollandse Kust (Zuid), sites I and II to take place in the autumn.

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