The Dutch government aims to promote energy conservation and renewable energy. Under its Energy Agreement for Sustainable Growth, the Dutch government has set a target for 14% of all energy to be generated from renewable sources by 2020, rising to 16% by 2023.

The stated aim is to make the Netherlands less dependent on coal, oil and gas, while securing the country’s energy supply and keeping energy costs under control.

The Government hopes that offshore wind energy will play a significant role in meeting these targets, with cumulative installed offshore wind capacity planned to reach 4500 MW by 2023: conditions for offshore wind energy in the Netherlands, are "excellent", it believes, with relatively shallow waters, good wind resource, good harbour facilities, an experienced industry and a new, robust support system.

With this in mind, the Dutch Government will be inviting offshore wind power companies to bid to build two 350 MW wind farms off the Dutch coast, and have them constructed as from 2019.

Offshore plan

The tender for these two projects, in the Borssele Wind Farm Zone (sites I and II) located 12 nautical miles off the coast of the province of Zeeland, is planned to open on 2nd December and close on 31st March 2016. It will be the first of five annual calls  for tenders planned under the Energy Agreement for Sustainable Growth. Combined, the five 700 MW tenders will result in a total of 3500 MW of new offshore wind capacity online in three designated offshore wind farm zones by 2023.

1000 MW is already operating (or under construction) in Dutch waters, so the new capacity should ensure that the 4500 MW target is reached.

The Dutch Government consulted with the energy industry to develop a new, robust support system - and, as part of that, the Offshore Wind Energy Act. Under a new market framework, and SDE+ subsidy support system, the Government is responsible for grants, permits and project consents while national transmission system operator TenneT is responsible for grid connection.

Project development rights and subsidies will be awarded to companies via the five planned tenders. Companies (or consortia) bidding the lowest price will be awarded a 30-year permit to build and operate the relevant wind farm (which includes time for financial close, building and decommissioning) and granted the associated 15-year SDE+ subsidy straight away.

Key assessments and documents

To help companies fully prepare competitive bids, the Government provides all the relevant site data regarding the physical conditions of the wind farm sites along with the environmental impact assessment (EIA). This site data is suitable for pre-design purposes. The Project and Site Description for the Borssele Wind Farm Sites I and II, for example, can be downloaded here. This provides an overview of the relevant site data companies need when preparing their bids. It also includes detailed information about the legal framework and grid connection rules relating to planned offshore wind developments along with the EIA.

Companies have to come up with strong plans that meet the criteria resulting from the support system as explained in the project and site description document. There are strict timetables that must be adhered to. These include, for example, dates by which bank guarantees must be supplied.

From December 2015 through to March 2016 the subsidy application documents will be available for download from the Netherland's Enterprise Agency's website here. Companies should note that they are expected to submit their final bid submissions for the Borssele Wind Farm Sites I and II tender in person, taking them to the agency's office in Zwolle no later than 31st March 2016, 17:00 pm (CEST).

Cost control

According to the Government, critical to the overall plan for The Netherlands is that the energy produced from renewable sources is cost-competitive. In meeting its future energy demand, the country aims to keep costs under control.

For most wind projects, the pre-construction and even pre-bid costs are high for individual companies. Costs must be made for site investigations, for environmental impact assessments, and so on. This increases risks for bidders, and by consequence the overall costs for offshore wind development. To address this, the Dutch government has now decided to take over the responsibility for many of these pre-development issues. Subsequently we stipulate (within the project WFSD) all of the key project and technical requirements that bidders must meet as a minimum to qualify for a tender.

This way, it believes, the cost and risk burden for companies is strongly reduced, and that a level playing field for all potential bidders is ensured. With all else equal, the key criteria in winning a tender becomes price. Developers are free to choose which brand and size of turbine they install (a minimum and a maximum rotor diameter are prescribed which in practice means a capacity from 4 up to 10 MW), foundation structures, array layout and so on as long as their plans meet all of the WFSD requirements.

Overall, according to the Government, assessments indicate that the cost of offshore wind power can be 40% lower in 2024 than in 2014. This price drop is an integral element of the Energy Agreement for Sustainable Growth, an agreement developed in full consultation with the industry. Hence, prices for each tender will be capped, starting at €0.124/kWh for Borssele Wind Farm Sites I and II. The price cap will be lower for each subsequent tender.

In 2016, when bids will be invited to build two more 350 MW projects, this time at Borssele Wind Farm Sites III and IV, the price cap will be €0.11975/kWh. It then drops to €0.1075/kWh for the 2017 tender, then €0.10325/kWh in 2018 and €0.10/kWh in 2019, as shown in the table below.
 

Table: Price caps in the annual tenders for the Dutch offshore wind programme 2015-2019

ABOUT THE AUTHORS

Tina Leguijt is Manager, Renewable Energy, Netherlands Enterprise Agency (RVO.nl), Ruud de Bruijne is Project Manager, Offshore Wind Energy, Netherlands Enterprise Agency (RVO.nl), Frank van Erp is Senior Advisor, Renewable Energy, Netherlands Enterprise Agency (RVO.nl)

FURTHER INFORMATION

http://offshorewind.rvo.nl