EU Approves EUR 5 Billion Danish Offshore Wind CfD Scheme

The European Commission has approved a EUR 5 billion Danish state aid scheme to support the development of offshore wind.

The measure, cleared under the EU’s Clean Industrial Deal State Aid Framework (CISAF), will support the construction and operation of two offshore wind farms, Hesselø and North Sea I Mid (Nordsøen I Midt).

The two projects are expected to have a combined capacity of around 1.8 GW and generate approximately 7.8 TWh of electricity annually, equivalent to about 25 per cent of Denmark’s electricity production in the previous year, according to the Commission’s press release from 23 March.

Under the scheme, aid will be granted through a two-way contract for difference (CfD) in the form of a monthly variable premium. The premium will be calculated by comparing the bid price to a reference market price, weighted by the monthly capability of the offshore wind farm. The offshore wind farm owners will receive payments when the reference price is below this bid price, and pay the Danish authorities when the reference price is above the bid price.

The scheme will run for 20 years and support both the construction and operation phases of the wind farms.  

The Commission says it found the measure to be necessary, appropriate and proportionate to accelerate the transition to a net-zero economy and to facilitate the development of renewable energy in line with EU objectives.  

Commenting on the approval, Teresa Ribera, Executive Vice-President for Clean, Just and Competitive Transition, said the scheme would enable Denmark to deploy offshore wind capacity faster, reduce dependence on fossil fuel imports and increase the share of renewables, while limiting distortions to competition.  

After suspending its “open door” offshore wind scheme pending clarification of compliance with EU state aid rules in 2023, Denmark has been working on its offshore wind framework in recent years, including moving forward with CfD-based tenders.

The Danish Energy Agency (DEA) launched CfD-based tenders for three offshore wind areas in November 2025: North Sea Mid, Hesselø and North Sea South (Nordsøen Syd), with the deadline for bids for the North Sea Mid and Hesselø set for the spring of 2026.