Eneco Withdraws from IJmuiden Ver Offshore Wind Auction, Calls for Change in Future Dutch Offshore Wind Tenders

Business & Finance

March 28, 2024, by Adnan Memija

The Dutch utility company, Eneco, together with its partner Equinor, has pulled out of the offshore wind tender for the IJmuiden Ver Wind Zone in the Netherlands, saying that due to deteriorated market conditions, the current (Dutch) approach to offshore wind is not future-proof.

The conditions that Eneco mentions in its five-page white paper include high-interest rates, high material costs, and an uncertain electricity market.

Eneco planned to bid for the Dutch tender to build a new 4 GW offshore wind farm spread over two sites, IJmuiden Ver Alpha and Beta, together with Norway’s Equinor.

The tender for the two sites, each of which can house approximately 2 GW of installed offshore wind capacity, was launched in February 2024, with IJmuiden Ver Gamma, the third site, expected to be put out to tender next year.

Eneco said in a social media post that it is difficult to calculate the business case for an offshore wind farm due to the increase in material prices, and the much higher interest rates combined with the lower electricity prices.

Now, the company calls for a change in future offshore wind tenders. It suggests the government should place less emphasis on money to achieve the best results, which can be done, for example, by including so-called Contracts for Difference (CfD).

Developers bid on an electricity price at which they can build the wind farm. If the price of electricity is higher they pay the difference to the government, but the government will make up the difference if the electricity price is lower than the developer had bid for, said Eneco.

Eneco also says that tenders for wind farms are too large now and should be limited to 1 GW to reduce risk.

Owned jointly by Mitsubishi Corporation and Chubu Electric Power, Eneco is currently involved in four offshore wind farms in the Dutch North Sea and is developing a fifth.