Denmark to pick winner of big offshore wind tender in lottery (updated)

Eneco Energy

25/11/2021 09:58

(Adds background)
    COPENHAGEN, Nov 25 (Reuters) - Denmark will hold a lottery
on Dec. 1 to pick the winner of a contest to build the 1
gigawatt Thor offshore wind farm, which will be the country's
largest, after several bids were made at a minimum subsidy price
close to zero, it said on Thursday.
    The project is one of three large offshore wind farms
Denmark aims to have built before 2030 as part of its plans to
reduce carbon emissions to 70% below 1990 levels by 2030.
    The Danish Energy Agency said it was inviting a number of
bidders to participate in the draw, after it received several
offers for the minimum price of 0.01 øre/kWh (0.0001 Danish
crowns) and the full capacity.
    The tender is based on a so-called contract for difference
(CfD) scheme, meaning the winner is guaranteed a minimum price
for its electricity. 
    When the wholesale power price rises above the CfD strike
price, which is close to zero in this case, the generator will
pay back extra cash to the government until a 2.8 billion Danish
crowns ($423 million) cap is met.
    This is likely to happen within two to three years and
afterwards the generator will only make money on selling power
at market conditions, according to Danish wind lobby group
WindDenmark.   
    Surging demand for wind power, technological progress and
competition among turbine makers has driven down the level of
subsidies governments pay to get projects built. Some countries
have even awarded tenders without price support.  urn:newsml:reuters.com:*:nL8N2QB3IR
    The Danish project has drawn interest from traditional wind
players like Orsted  ORSTED.CO  and firms such as French oil
major TotalEnergies  TTEF.PA , which teamed up with Spain's
Iberdrola  IBE.MC  for the auction. 
    Other bidders include Sweden's Vattenfall, a joint venture
between Dutch energy company Eneco and Danish European Energy,
as well as a joint bid from British utility SSE  SSE.L  and Thor
OFW. Germany's RWE  RWEG.DE  is also participating via a
subsidiary.  urn:newsml:reuters.com:*:nL8N2JP1OJ
    Thor is expected to be connected to the grid between 2025
and 2027 and total investment costs are estimated at 15.5
billion crowns.
    The head of Siemens Gamesa  SGREN.MC  warned on Wednesday a
decade-long race to bring down the cost of generating wind power
could not continue, as it would reduce the financial muscle of
turbine producers to continue investing in new technologies.
 urn:newsml:reuters.com:*:nL8N2SF3L7
    ($1 = 6.6287 Danish crowns)

 (Reporting by Stine Jacobsen, additional reporting by Nora Buli
Editing by David Goodman and Mark Potter)
 ((stine.jacobsen@thomsonreuters.com; +45 21 56 90 10; Reuters
Messaging: stine.jacobsen.thomsonreuters.com@reuters.net))