Offshore wind in The Netherlands - Borssele tenders in rapid succession
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Partner
Germany
As a partner in our Hamburg office, I offer our clients long-standing expertise in renewables, energy networks and complex infrastructure projects. I have been active in the energy sector since 2010, which has provided me with a profound inside knowledge as well as a good understanding of the energy business.
As the parties involved are still processing the outcome of the first Dutch offshore wind tender, the next round is just around the corner. We summarise the recent developments of both tenders.
Tender Borssele Wind Farm Sites I & II
The outcome of the first tender, Borssele sites I & II, has provided The Netherlands with a prominent spot on the world map of offshore wind projects. Dong Energy won the tender with an average bid strike price, excluding transmission costs, of 72.70 EUR per MWh during the first 15 years of the contract. It is expected that around EUR 2,7 bln less subsidy will be required to complete the wind farms. Globally, this is the most competitive offshore wind farm ever to be realised. The foreseen cost reduction is considered to be of great importance in the transition to renewable energy.
The remaining bidders of the first tender did not receive a rejection of their bids yet, since the award decision has been held over. In case Dong Energy is not able to fulfil the requirements of the execution agreement and the bank guarantee (article 8 of the Ministerial Order for Offshore Wind Energy 2015) the next bidder in line will be awarded the permit and the subsidy.
Once these requirements are fulfilled it is expected that Netherlands Enterprise Agency (hereafter: ‘RVO’) will publish some sort of a list of ranking, from which the bidders can make out their personal ranking. An advantage for RVO of such publication could be that the incentive for the remaining bidders to file an appeal against the decision to award Dong Energy is being minimised.
Tender Borssele Wind Farm Sites III & IV
It is about time to think ahead, as the tender for Borssele zones III & IV will soon be open. On the 8th of July the Ministerial Order for Offshore Wind Energy 2016 was published which diverges on some points from the Ministerial Order for Offshore Wind Energy 2015 (hereafter: 'Regulation 2016). The new provisions include the requirement that the own assets of a parent company will be taken into account for a maximum of two applications and only with the written consent of the parent company. Also new is that if a combined bid for the two sites will be ranked higher than the highest ranked non-combined bid, the ranking of both combined bits will be based on the weighted average of the tender amount per kWh of the bids involved. Regulation 2016 also introduces the condition that in case the applicant exceeds the allowed number of submissions (one bid per zone and one combined bid) all the applications of that applicant will be denied.
Even though the first Borssele tender resulted in an amount of 72.70 EUR per MWh far down from the allowed maximum and the required subsidy for these sites is expected to be lower than anticipated, both the maximum bid and the maximum subsidy remain the same.
The provisions that the bank guarantee issued by a bank within the European Union is accepted has not been changed. However, the possible impact of Brexit should be noted. For now, a guarantee issued by a United Kingdom based bank is accepted, but this might change for future tenders.
The tender period runs from 16 September 2016 to 29 September 2016 at 5 pm. The time frame for submitting a bid is thus 14 days. This is quite a short period, which is due to the fact that some parts of the Wind Farm Site Decisions for Borssele zones III, IV and V were not published properly. A draft amending decision has been published on 1 July 2016 to align the coordinates of the Wind Farm Site Decisions for Borssele zones III, IV and V with 'Appendix C: Coordinates and Boundaries Borssele Wind Farm Zone', which is the appendix to the Project and Site Description. Any party may give its views in writing until 11 August 2016. Then the final amending decision will be published and interested parties may appeal this decision. This means that the Site Decisions will not be irrevocable at the time of the tender. However, no appeals were filed against the first Wind Farm Site Decisions for Borssele zones III, IV and V and since the draft amending decision only entails changes to some of the coordinates and maps, appeals are not expected.
The application form will soon be published on RVO.nl. It should be noted that RVO only accepts (content related) questions regarding this tender until 9 September 2016. The reason for this is that the RVO wishes to have enough time to answer the questions and not to create uncertainty during the short submission period. The RVO has also confirmed that this tender round it will not be possible for applicants to have their draft application checked by RVO before submitting the final application.
This brings us to the final conclusion that for interested parties it is crucial to keep in mind the final date to submit questions to the RVO of 9 September 2016 and to be aware of the short submission period running from 16 September 2016 to 29 September 2016 at 5 pm.
