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Denmark selects CfD model for Thor offshore wind project

Wind turbines at sea. Author: CGP Grey. License: Creative Commons, Attribution 2.0 Generic.

November 18 (Renewables Now) - Denmark has chosen the Contract for Difference (CfD) competition model for the Thor offshore wind park, expected to have a capacity of 800 MW-1,000 MW.

Trade body Wind Denmark said in a statement on Friday that this choice will lead to the investor and the state sharing risk and possible financial gains. Wind Denmark director Jan Hylleberg described the decision as “very positive.”

The selected model involves a reverse auction in which investors will make bids. If the awarded bid price is above the market price, the state will be required to pay the difference, and if it is lower, the difference will be paid by the wind park operator, Wind Denmark explained.

In total, the state has allocated DKK 3.7 billion (USD 547.5m/EUR 495.1m) to the Thor contract and this covers not just the construction of the offshore wind park, but also its connection to the grid.

The Danish Energy Agency (DEA) and transmission system operator (TSO) Energinet will host a market dialogue conference with possible tenderers and stakeholders on November 25, 2019, in Copenhagen. At the event, the pair will present some of the key elements of the tendering procedure. The market dialogue will focus on the timetable for the tendering process, the conditions for pre-qualification, the award criteria and financial terms, the process for environmental assessments and issues concerning grid connection.

“The ultimate aim of the dialogue is thus to collect relevant input from market players and thus pave the way for obtaining lowest possible bid prices, when final bids are to be submitted for the Thor Call for Tender in 2021,” DEA said in a statement.

In September, the agency announced that a Strategic Environmental Assessment (SEA) will have to be completed before Denmark can accept final bids in the Thor tender. The process is to be completed by the second quarter of 2021 and Energinet will be in charge of it at the operational level. It will also carry out the Environmental Impact Assessment (EIA) of Thor’s onshore portion. The EIA-process for the onshore project is to be completed by the third quarter of 2021.

Thor is the first of the three offshore wind farms that were agreed to be built with the Energy Agreement of 2018. The plant is expected to be completed around 2025, according to Wind Denmark. The DEA statement, though, says that the facility should be in full operation in 2027 at the latest.

(DKK 1.0 = USD 0.148/EUR 0.134)

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Ivan is the mergers and acquisitions expert in Renewables Now with a passion for big deals and ambitious capacity plans.

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