Renewables

European wind farm auctions are increasingly using non-price criteria

European wind farms auctions are increasingly using non-price criteria

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Published

December 20, 2022

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Published:

December 20, 2022

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The latest auctions for renewable energy sources held in the Netherlands demonstrate the trend of European countries moving from price to non-price criteria for awarding permits for building wind farms. When assessing the bids, Dutch authorities focused on the solutions for integrating wind farms into the energy system and on biodiversity.

Over the past month, the Netherlands Enterprise Agency (RVO) announced the results of a competitive bidding process for allocating sites VI and VII within the Hollandse Kust Wind Farm Zone in the North Sea.

The zone, 53 kilometers off the country’s west coast, will host wind power plants with a capacity of 1.4 GW in total as part of the country’s effort to add 21 GW in offshore wind farms by 2030, compared to the current 2.5 GW. The plan is for offshore wind to secure 75% of consumption in the Netherlands.

The main criterion for site VII was the contribution to the integration of the wind farm into the Dutch energy system.

It means, among other things, that any surplus electricity generated by the wind farm – such as when there are strong winds –  could still be used, said RVO.

The criterion has two segments: stimulating investments for the integration of the wind farm, and innovation to enable the integration of the planned facility as well as other existing and future offshore wind farms.

Half of the points were awarded based on the said conditions, and it was decisive for the final ranking, according to RVO.

Integration will be facilitated by hydrogen production

The permit for site VII for a facility of 700 MW was awarded to Oranje Wind Power II, owned by RWE. The company plans to install onshore electrolysers for the production of green hydrogen with a combined capacity of 600 MW and add 225 MW of e-boilers for district heating and industrial applications, together with batteries and floating offshore solar energy.

The remaining three criteria were the financial offer, which accounted for 10% of the maximum points, guarantees for the project’s competitiveness, and the wind farm’s contribution to energy supply. The investor offered EUR 50 million, which means the government will not provide subsidies. However, transmission system operator TenneT will build the substation and connect the facility. The expected start of operation is in 2026.

France and Germany also use non-price criteria

WindEurope said the European Commission’s State Aid Guidelines for Energy allow for up to 30% of scoring in Contract for Difference (CfD) auctions to be based on non-price criteria. The Netherlands is not using CfDs, so it can have a higher rate.

Apart from the Netherlands, France is using non-price criteria for 25% of scoring in its upcoming offshore wind auction – for a 1 GW wind farm off Normandy. The German government will use four non-price criteria for offshore wind farms that won’t receive state support, and Belgium is considering an extensive set of criteria, said WindEurope.

Biodiversity: wind farms and nature must go together

For site VI, instead of integration into the system, the contribution to the North Sea environment was the main criterion. The other three benchmarks were the same as for site VII. Dutch authorities asked investors to propose how they can mitigate or restore the impact of the offshore wind farm on maritime biodiversity.

The permit to build a 756 MW wind farm was awarded to Ecowende, a joint venture of Shell and Eneco. The power plant should come online in 2026.

Minister for Climate and Energy Policy Rob Jetten said the plan presented by Ecowende demonstrates what can be done to design wind farms that work with nature.

The wind turbines will be widely spaced so that birds can fly between them safely

Such an approach, he added, is crucial because the country will need many more offshore wind farms to secure sufficient amounts of green energy. With 40 innovative proposals, the project initiates a movement to build offshore wind farms with minimal impact on nature, said Jetten.

According to RVO, the design of the winning wind farm is ‘nature-inclusive’. It includes a section where wind turbines are widely spaced so that birds can fly between them safely, various piling techniques to minimize the impact on marine habitats and the placement of reef structures on the seabed to boost marine biodiversity.

The investor will pay EUR 63.5 million to the government for the permit.

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