16 December 2022
The Netherlands run another successful auction based on non-price criteria
The Netherlands Enterprise Agency (RVO) published the results of “Site VI” of the Hollandse Kust West (HKW) tender. It is the second site in the HKW area. The winner is Ecowende – a joint venture between Shell and Eneco. They will be building the 756 MW project by 2026. This auction was a comparative assessment using qualitative criteria in which the bidders had to demonstrate that they can mitigate or restore the impact of the offshore wind farm on the maritime biodiversity.
This was the second successful offshore auction in a short time using mostly non-price criteria in the Netherlands. The design of the winning bid will be ‘nature-inclusive’. One section of the wind farm will have turbines which are more widely spaced allowing birds to fly in between them safely. During the construction phase various piling techniques will be used to minimise the impact on marine habitats. And reef structures will be placed on the seabed afterwards.
The auction once again required developers to pay for the right to build the wind farm. The negative bid Ecowende offered was €63.5m. And the Dutch Government will not provide any further financial support. Instead they will use this money to ensure wind farms are designed with due regard to the environment and other activities in the North Sea. However, the Government has to keep in mind that negative bidding creates extra costs for developers which have to be passed on to someone. Either the consumer who is already struggling with high energy costs or the supply chain – many parts of which are already operating at a loss.
This auction was a success. But there is simply not enough capacity up for grabs. Developers put a lot of resources into their bid to make sure their projects score well. Even those who do not win. This could be solved by auctioning more capacity at the same time. The Dutch can already do this in their IJmuiden Ver auction which will take place next year. It would be best if this covered several GW.
Other countries are starting to include qualitative criteria in their auctions too. Norway has announced their auction design for the Utsira Nord floating wind farm. This project will have 1.5 GW of capacity. The Government will divide this area into three zones each of which will have a 500 MW wind farm. The criteria will include the facilitating of innovation and technology development in floating offshore wind. The auction will take place in the first quarter of 2023.
WindEurope’s Chief Policy Officer Pierre Tardieu said: “The Dutch organised another successful qualitative auction. More countries are starting to use these non-price criteria. That’s great. Including non-price criteria in auctions rewards companies for the wider societal value wind energy brings. And it encourages innovation in important areas like system integration, biodiversity protection and community engagement. But these auctions need to be a lot bigger. There are many players who can develop very competitive offshore wind projects. It makes no sense to have them compete over small auction volumes. It’s a waste of time and resources. And it does not help energy consumers. Europe needs home-grown energy asap.”
Jan Vos, Chairman of the Netherlands Wind Energy Association (NWEA) said: “Wind energy in our North Sea is the price-conscious and geopolitically sensible answer to the climate crisis, the energy crisis and the ecological crisis. This wind farm is a big step in the right direction. The biodiversity of the North Sea needs a broad and holistic approach. We must remove negative influences on ecosystems and take a bigger approach to nature enhancement. Our earth deserves that.”
