Hollandse Kust (zuid) I and II beauty contest explained in five steps:
1. How is the tender structured?
- The Dutch Government has designated five offshore wind farm zones for the development of new wind farms, each wind farm zone consisting of one or more wind farm sites. For each wind farm site, a build and operation permit is awarded in a subsequent tender process until 2019. Permits have already been awarded for four wind farms in two tender rounds for the Wind Farm Sites Borssele I to IV.
- This tender for the Wind Farm Sites I and II (each 350MW) of the Hollandse Kust (zuid) Wind Farm Zone will be different to the previous tenders. Due to the recent zero-subsidy tenders in Germany (see here), the Dutch government has revised the tender procedure by Ministerial Order dated 13 October 2017.
- In previous Dutch offshore wind tenders, the bidders applied for a subsidy and permit, which were jointly granted to the winning party. The new tender procedure of the Hollandse Kust (zuid) I and II takes the zero-subsidy scenario into account. The tender procedure is now designed in a way that a zero-subsidy bidding process is established and only if this does not result in a winning bid, a 'regular' subsidy-based tender is initiated. A two-round process has been established (see also Two-step tender procedure for Dutch offshore wind announced):
- Round 1: Zero-subsidy tender procedure
Bidders may apply for the award of the build and operate permits for the Wind Farm Sites I and II of the Hollandse Kust (zuid) Wind Farm Zone. The bids need to meet the general participation requirements as set out in the Ministerial Order dated 13 October 2017. As mentioned, in this round a subsidy will not be granted.
The zero-subsidy tender procedure will be successful if at least one bid successfully meets the general requirements. In case two or more bids meet these requirements, those bids will be ranked on the basis of six qualitative criteria (beauty contest) as set out in Article 5 and the Appendix of the Ministerial Order dated 13 October 2017. The winning bid will be granted the build and operate permit.
- Round 2: Subsidy tender procedure (if applicable)
If the zero-subsidy tender procedure will not result in a winning bid, the procedure will fall back to the procedure as known from the last tender rounds, i.e. a regular subsidy-based tender procedure will be initiated (for details see our previous update "What you need to know about the Dutch offshore wind tenders").
We will now further outline the zero-subsidy tender procedure (round 1):
2. What are the participation requirements?
- Bids will be accepted if bidders meet the qualification criteria as set out in the Dutch Offshore Wind Energy Act and the Ministerial Order which include:
- Bidders need to demonstrate that their project is technically, financially and economically achievable;
- As part of demonstrating the financial achievability, the bidder's own assets shall amount to at least 20 % of the total investment costs for the wind farm to which the bid relates (different from previous tenders);
- Bidders need to demonstrate that the building and exploitation will commence within four years after the permit will have become irrevocable.
3. How will the applications be ranked?
- In case at least two bids are accepted, these bids will be ranked on the basis of the following qualitative criteria (beauty contest):
- 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; and
- The quality of the measures to ensure cost-effectiveness.
- The Appendix of the Ministerial Order sets out various sub-criteria and the weighting of the ranking criteria. The first ranking criterion (knowledge and experience of the parties involved) refers to specific offshore wind knowledge and experience. Parties not having such knowledge and experience may consider teaming up with offshore-experienced parties (such as suppliers).
- The higher the score, based on the scores per criterion set out in the Appendix, the higher the ranking. If two or more applications are ranked equal as highest, Article 5 of the Ministerial Order specifies which criterion has greater weight.
4. What happens after the permit is awarded?
- As the assessment of the bids on which the ranking is based leaves space for discussion, the award of the permit could be contested. The term for contesting the award is six weeks.
- The Dutch government has not yet given full clarity on the information which will be disclosed with regard to the winning bid. The disclosure of information on the winning bid should respect confidentiality of the data provided by the bidder and at the same time offer sufficient information for other bidders to substantiate their objections to the award.
5. What is the timeline?
- The bidding period will start on 15 December 2017 and will close on 21 December 2017, 17:00 CET.
- The decision should follow no later than 13 weeks after the closing date (22 March 2018), which could be extended with another 13 weeks (21 June 2018).
- In case there will be no bid or no winning bid in the zero-subsidy tender procedure, the bidding period of the following subsidy tender procedure is not yet clear and will be decided on by the Dutch government.