Denmark Opens Doors to Unsolicited Offshore Wind Bids

The Danish Energy Agency (DEA) has launched a new technology-neutral tender for multiple renewable energy technologies, with an “open-door” procedure in place for offshore wind.

In its third technology-neutral tender, opened on 23 August, the DEA is inviting bids for the state support of solar power, onshore wind, wave energy, hydropower, and offshore wind projects. The deadline for submitting applications is 22 October 2021.

For offshore wind, Denmark has set up an open-door procedure as part of this process, which means developers can apply to develop projects at a location of their choice, instead of competing to build a project at a specific location and of a specific size, which is typically offered through dedicated state tenders.

Through this procedure, project developers can submit an unsolicited application to obtain permission to carry out feasibility studies in their selected area.

To build the projects, offshore wind developers need to obtain three permits from the Danish Energy Agency: the feasibility study permit, a construction permit, and a permit for electricity production, with each permit being a prerequisite for the next as the project progresses.

The last time the DEA held a technology-neutral tender was in 2019, when solar and wind projects competed for the lowest support price, which resulted in an average winning support price of 1.54 øre / kWh. This was 32 per cent lower than the year before and 16 times lower than the support price in the previously applicable support scheme (called the 25-øre), which expired in February 2018.

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In June 2020, the support model was changed from a supplement to the market price to the Contract for Difference (CfD) model, where the state assumes a larger share of the long-term risk associated with the development of renewable energy.

Now, through this technology-neutral tender, the developers can achieve a fixed price of up to 25 øre/kWh for 20 years, as the DEA has set a total payment ceiling of DKK 1.2 billion (around EUR 161 million).

As different technologies compete for support in the technology-neutral offer, it is not known in advance how the support will be distributed between solar, wind, wave power and hydropower.

Offshore wind projects competing through the open-door procedure must be connected to the grid within four years from entering into a contract with the Danish Energy Agency, while projects using other technologies need to be grid-connected within two years.

Photo: Illustration; The Horns Rev 1 offshore wind farm in Denmark. Source: Vattenfall