The industry has been waiting for Vattenfall to give out more information on its Hollandse Kust Zuid 1 & 2 zero-subsidy bid after the company won the Dutch tender in March, especially since Ørsted – world’s leading offshore wind developer and one of the first to have unsubsidised projects in the pipeline – decided to pass on bidding to build the offshore wind farm.
To remind, Ørsted reportedly saw bidding for subsidy-free Hollandse Kust 1 & 2 as viable only if speculating on power prices, i.a., which poses a risk. For Vattenfall, risk management was one of the main decisive factors in obtaining the rights for the approx. 700MW project, according to the latest information from the tender winner.
Vattenfall expanded on the main points of its offer during a press conference on 26 April, when the company presented its financial results for the first quarter of the year, and now it could be easier to connect the dots mapping the winning proposal.
What RVO.nl saw in Vattenfall’s offer?
Upon being awarded the two sites on 19 March, Vattenfall’s Senior Vice President of Business Area Wind, Gunnar Groebler, said that this was a result of the company’s continuous cost reduction efforts along its entire value chain, as well as Vattenfall’s solid track record and portfolio approach.
On 26 April, Groebler went into little more detail, first explaining that the Dutch government had set up the tender with a list of criteria according to which the participants could score a maximum of 100 points and Vattenfall, obviously, ranked the highest after the government evaluated the bids.
The focus of the selection criteria was risk assessment and risk mitigation, Groebler said. This was presented for each part of the project all the way from the design, construction, operation, to market risks, with the quality of mitigation measures proposed by the bidders being taken into account.
The criteria that the Netherlands Enterprise Agency (RVO.nl) had also applied include knowledge and the amount of previous experience that the contractors had, as well as the quality of the design of the offshore wind farm and project capacity (higher proposed output scored more points).
The Dutch government had also set out rules that saw the construction and operation of a wind farm as financially feasible only if applicants’ own assets amounted to at least 20% of the total investment costs for their proposed wind farm. This used to be set at 10% under the previous tenders for the Borssele Zone.
According to Gunnar Groebler, Vattenfall – which already holds a significant share of the offshore wind market – thought about how the project fits into its portfolio and how the company can leverage on it to support the bid in December 2017.
He added that an already strong footprint in the Netherlands, with a customer base (both B2C and B2B) of roughly 18TWh per year, has helped in winning the tender as well. Adding the 3TWh coming from Hollandse Kust 1 & 2 to this sounds reasonable and is surely something Vattenfall will be able to match, Groebler said.
What Vattenfall saw in Hollandse Kust Zuid 1 & 2?
“We have been able to drive down our costs. That’s the reason why we participated in this auction. We also need to connect this investment to the market in various ways, for example with long term contracts. This puts us in a good position to make money out of this kind of investment,” Vattenfall’s CEO Magnus Hall said.
Discussing the offshore wind farm itself, Gunnar Groebler said that this is a project with excellent site conditions, given its good wind resources, shallow waters (18-22m) and distance from the coast (30km).
Vattenfall will most likely use monopiles to support the wind turbines at Hollandse Kust Zuid 1 & 2 and build a wind farm of a total capacity of between 684MW and 760MW.
And while Ørsted reportedly found the commissioning timeline for Hollandse Kust Zuid 1 & 2 too short to allow for the use of next-generation offshore wind turbines, as opposed to with its zero-subsidy German projects, it looks like Vattenfall might put 12MW turbines on those monopiles. Namely, during a Q&A session at the press conference, Groebler discussed wind turbines to be used for the Dutch project and, although this is yet to be decided, he said the company was already exploring GE’s 12MW Haliade-X to better understand the platform that GE recently launched.
This opens up for new possibilities, Groebler said, but the decision is yet to be made and Vattenfall will be discussing wind turbines not only with GE but other suppliers too before chosing what platform to use, and this will be done once the project advances to this particular stage.
The developer expects to get an irrevocable permit from the Dutch Energy Minister in May and, according to the tender rules, the wind farm needs to be fully operational within five years as of that point. In line with this, Vattenfall will start building the wind farm and have the first power generated in 2022 at the latest, with the entire project up and running in early 2023.
The company is currently making the final preparations, including the design of the wind farm, continuation of internal planning and finalising tender processes for major components.