4 September 2024
Interview with Peter Goderis, Elicio, and Felipe Cornago, BayWa r.e.
In May, France announced the results of Europe’s very first commercial scale floating offshore wind auction. BayWa r.e. and Elicio won the right to develop and build a 230-270 MW site off the coast of Southern Brittany. The strike price of €86/MWh had many industry experts scratching their heads. It was well below the €140/MWh ceiling price. What makes you confident that you can deliver floating offshore wind at such a low price?
Between the Consortium’s prequalification in August 2021 and bid submission in October 2023, we have been developing and rigorously structuring our bid on the basis of our cumulated track record and experience, together with multiple expert advisors and our extensive offshore wind network. This resulted in a solid and well-founded project.
Our Pennavel project benefits from an exclusive 40-year concession of the maritime public domain and a 20-year tariff (€/MWh) indexed to inflation, which will be updated to the financing base rate when reaching financial close. It can also count on a secured grid connection developed, financed, constructed and operated by the French transmission operator RTE. These key parameters provide further leverage on the inherent benefits of a floating wind project assembled closer to shore but able to capture the best wind resource further offshore.
Regarding the wind turbine model, the consortium maintains a long-standing and proven relationship with their industrial partners, particularly turbine suppliers, across their hundreds of MW of onshore and offshore projects in Europe. The final wind turbine model that will be best suited to the site and project specifics has not yet been decided on. However, when looking at the development and learning curves of WTG platforms across the past decade, we are convinced that European turbine suppliers will be in a position to supply a model fit for the project’s requirements and to meet wider market demands. Several other commercial floating wind projects are planned to be commissioned shortly after Pennavel, leveraging support mechanisms such as the NZIA.
What role does the French auction design play in your decision to bid at €86/MWh? How do the French Contracts for Difference (CfDs) and price indexation model factor into your considerations?
Site conditions, project size, the developers’ scope and the auction design specifics are all key drivers in determining a bid price.
In France, all offshore wind tenders are allocated through a long-term CfD; in the case of Pennavel with a 20-year indexing tariff, the exclusivity on seabed rights, and a secured grid connection with RTE.
The French CfD is generally considered to be amongst the strongest in Europe, with multiple onshore and offshore wind projects having reached financial close over the past years backed by a large pool of expert project finance lenders and international developers. The CfD aims to mitigate risks where possible to ensure the realisation of the projects and meet the country’s ambitious targets in terms of locally produced renewable energy.
Furthermore, there are plans for a significant investment in France’s regional and national ports. The shareholders of the Port of Brest, comprising the Brittany Region, Brest Métropole, and the Western Brittany Metropolitan Chamber of Commerce and Industry, have signed an agreement to invest €900m over a forty-year period. Of this, €500m over the first ten years will be invested in projects primarily centered on the energy transition, with a particular emphasis on positioning the port as a key player in floating wind power.
These conditions around our Pennavel project provide a strong basis for its development and allow it to represent a worldwide reference for the sector, contributing to competitiveness in pricing and driving progress across the entire floating offshore market.
How does the French project differ from the “Buchan” floating offshore wind project you are developing in Scotland? Are there specific site conditions off the coast of Brittany that help you reduce costs?
Following Crown Estate Scotland’s rigorous Scotwind prequalification process in 2021, we, Elicio and BayWa r.e., together with BW Ideol, have secured the rights to develop the 960 MW Buchan Offshore Wind Farm on the basis of the consortium’s experience, financial strength and detailed project and supply chain delivery plans. Our dedicated project team based in Glasgow has been actively pursuing the development of the project over the past three years, with the recent submission of the Onshore Scoping Report, in light of a construction phase anticipated shortly after Pennavel’s.
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