Denmark: the race for near shore wind projects

Thursday, 18 June, 2015 - 10:00

Three companies recently pre-qualified to build near shore wind projects off the Danish coast. They are now battling to reduce the price – and win the tenders.

The maximum capacity in each designated area is 200 MW, with the exception of Bornholm, where the maximum is 50 MW. Only some of the areas are expected to be exploited. Which areas will these be? This will be decided at the end of the bidding round in spring 2016.

In connection with the 2012 energy agreement, the Danish Energy Agency (DEA) decided to invite developers to build up to 350 MW of near shore offshore wind installations to be completed by 2020. By locating the wind turbines close to the shore, the DEA intends to reduce the cost of offshore wind energy. Three of the five applicants have now been invited to participate in the upcoming tender negotiations. The challenge they face is minimising the cost of energy.

Three experienced players are battling to build the near shore wind projects. They are Vattenfall Vindkraft A/S, one of the world's largest offshore wind power operators, European Energy Nearshore Consortium, which has developed 56 onshore wind farms since 2004, and wpd HOFOR Danish Offshore Consortium, which is a strategic partnership between HOFOR, the Copenhagen utilities company, and wpd, one of Germany's leading wind power development companies.

All the bidders face having to establish projects where the price of the wind farm is as low as possible while the quality remains impeccable. “It is a great challenge to get the price down to € 0.09 per kWh and we are not certain that it will be possible to achieve that goal. But all 3 pre-prequalified companies are in the same situation,” says Head of Offshore Development Denmark Per Stenholt from Vattenfall. He states that one of the challenges regarding the price is that the 350 MW - which is the maximum MW that can be installed - must be divided into at least two projects. On the positive list is that Vattenfall will be able to benefit from economies of scale in connection with the establishment of Horns Rev 3 which is due at the same time as the near shore windfarms by the end of 2019.

HOFOR also feels challenged in relation to the price and is looking at new solutions. ”We will have to invent new concepts. We cannot simply copy concepts from existing offshore wind farms built in deeper water. We will engage the supply chain in a dialogue and seek out new know-how so that we can make the most competitive tender. In our view, there are savings to be made on foundations and cable-laying,” explains Head of Wind & Energy Trading Jesper Pedersen from HOFOR.

European Energy says it sees economies of scale and standard products as the means to reduce the CoE. ”In connection with the open door projects, we're currently planning to build up to 560 MW, so we're looking to achieve economies of scale – not only in construction, but also in the subsequent O&M phase. We also see important potential in developing standard designs, especially foundations,” explains CEO Knud-Erik Andersen from European Energy.

By this time next year, it will be decided who has won the right to build the near shore wind projects.

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