Denmark Greenlights North Sea Energy Island Hub

Denmark to Launch North Sea Energy Island Tender in Spring 2023

The tender for the construction and operation of the Danish North Sea Energy Island is now expected to be launched in Spring 2023, as a new political agreement has been reached on the tender rules, which include significant requirements in the areas of working conditions and environmental protection.

The Ministry of Climate, Energy and Utilities

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This Summer, the Danish Energy Agency (DEA) announced it had pushed back the start date for the tender to build the North Sea Energy Island by up to twelve months, expecting it to be launched in September 2023, as the Agency saw a need for further tender preparatory work in order to reap Denmark’s offshore wind resources in an optimal way.

However, the Danish Government and political parties have now signed a new agreement that sets out requirements that will be part of the tender, enabling the procurement to be opened earlier next year.

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The agreement details on several aspects of the construction and operation of the artificial island, including the type of the company that the the state and the tender winner will jointly form, as well as the requirements for the project’s social and environmental aspects. The latter specifically concerns working conditions and sustainability requirements.

Public-Private Ownership Decided to Be in Form of a Partnership Company

Under the agreement, the energy island company will be established as a partnership company (Partnerselskaber; P/S) instead of the initially planned limited company. 

A partnership company is considered to ensure fairer competition in the upcoming tender, according to the Danish Ministry of Climate, Energy and Utilities.

The Ministry also said that in this way the state will make high demands on the future co-owner to ensure that the private company is a serious, professional, and fair partner.

The state will own at least 50.1 per cent of the shares in the energy island company, as agreed in September last year.

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Under the agreement, the project is expected to be screened in accordance with the Investment Screening Act and will use control tools available in the current procurement law.

The requirements for the private co-owner will apply throughout the public-private island company’s lifetime, from the construction phase, at the time of entering into joint ownership, and all through the operational phase.

The state will have a distinct degree of ongoing control over who owns the energy island and will, under conditions specified in the tender material and within the framework of tender and EU law, have the option to reject potential co-owners both in the tender phase and afterwards, the agreement text reads.

‘Unprecedentedly’ High Working Conditions and Environmental Demands

According to the agreement, the energy island is initially expected to be defined as critical infrastructure which, given the increased control of the private co-owner and simultaneous construction and co-ownership of the critical infrastructure, may be experienced as a stricter requirement by players in the market as certain requirements are new and unproven in practice.

“Not only are we building the world’s first energy island, we also insist on raising the bar for the construction to be done in a responsible manner – socially, economically and environmentally”, said the Danish Climate, Energy and Utilities Minister, Dan Jørgensen.

“We set unprecedentedly high demands for the island to be established under proper working conditions and with consideration for the environment, and we ensure responsible private co-ownership of the important critical infrastructure asset that the energy island will be”.

The final tender material will make demands on Danish wages and working conditions during the construction phase, student and apprentice positions, as well as proper accommodation conditions for the employees.

The contractual requirements in the tender material will ensure to the greatest extent possible that the North Sea Energy Island and its major components are constructed in accordance with the framework of the EU’s taxonomy for sustainable investments, including requirements for sustainable materials and the possibility of stricter, project-specific requirements for sustainability, according to the new agreement.

Social, environmental and sustainability requirements will also be applied for the operational phase.

In addition, the political agreement also outlines the direction for the Danish Energy Agency’s and the state advisers’ further work with tender frameworks for the energy island in the North Sea.

The further work with the island’s business model and technical concept will focus on a flexible island concept, which gives the opportunity to combine a dammed island with electricity transmission and energy conversion on platforms or in the offshore wind turbines around the island.

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