The Dutch Government has awarded a contract to build the world’s first
subsidy-free offshore wind farms.
The costs of offshore wind in Europe have been falling dramatically in
recent years as manufacturers bring ever-larger turbines to the market,
thereby triggering generating-cost economies of scale.
To be built by 2022, the twin Hollandse Kust Zuid 350 MW wind farm will be
the first to be built without public subsidy.
Going zero-subsidy means the wind farms will sell their electricity on the
wholesale power market instead of relying on a revenue stabilisation scheme
(e.g. a Contract for Difference) that locks in a fixed revenue.
The news follows the zero-subsidy offshore wind tender in Germany last year
that was a landmark for the industry. The German offshore tender was the
first to attract zero subsidy winning bids. But the projects will only be
built in 2024-25 – ie after Hollandse Kust Zuid is commissioned.
Following the German tender, the Dutch Government accepted offers from any
developer prepared to submit a zero-subsidy bid. Bids were then assessed
according to a range of qualitative criteria. The Dutch Government takes on
some of the risks involved in offshore wind projects, such as the cost of
the grid connection.
Giles Dickson, chief executive of the Brussels-based Wind Europe trade
association, said: “This news shows zero-subsidy bids are possible for some
developers in some markets not least where Governments take on and manage a
share of the project risk.
“Moreover, the Dutch Government has successfully minimised the risk linked
to offshore wind by giving clear visibility about future market volumes.
And the new Dutch Government has committed to bring in a carbon floor price
at national level which will help the business case for offshore wind.
“Wind energy is showing again and again that it can deliver ever more
capacity for less cash. That’s the key message other governments should
take from this: they should revise their ambition upwards in their national
energy plans and offshore wind is a great way to help them do this”.
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