11/28/2016

Political agreement secures world’s cheapest offshore wind

A broad political coalition in the Danish parliament has made an agreement which secures the completion of the Danish near shore tender of 350 MW. The tender was won by Swedish utility Vattenfall in September and has been subject to big uncertainty since, as the Danish government has proposed to cancel the tender. An uncertainty that has now been eradicated.

The near shore tender consists of the two offshore wind farms Vesterhav Syd and Nord, located 4-10 kilometers offshore from the Danish West coast. To date, the tender has the lowest Levelized Cost of Electricity (LCOE), meaning that no other offshore wind farm in the world can provide power at a lower price, all expenses taken into consideration over the lifetime of the park.

Along with the recent tender for the 600 MW Kriegers Flak, the Vesterhav Syd and Nord have been now approved as part of the political agreement which shifts the so called Public Service Obligation (PSO) tariff away from the electricity bill to the national budget. The PSO has been deemed problematic in accordance with EU law and subsequently the government has worked hard to find a different solution. A solution that now includes the approval of the near shore tender, as the government’s proposal to cancel the tender was rejected by a political majority.

“I’m very pleased that a broad coalition along with the government has landed on an agreement which secures the offshore tenders. This sends a strong signal and ends a long period of uncertainty in Danish energy politics. The agreement will secure thousands of jobs, allow the continued green transition, and at the same time, I’m very pleased that Denmark once again sets an example by building the world’s cheapest offshore wind farms,” says Jan Hylleberg, CEO, Danish Wind Industry Association.

DWIA has worked hard to have all tenders and content of the energy agreement (established in 2012) approved. The Danish authorities expect roughly 6,000 jobs to be created as part of the near shore tender. Along with the Kriegers Flak offshore wind farm, some 16,000 jobs (man-years) will be created. More than 10 % of the Danish electricity will be generated by the wind farms once they come in operation in 2020 and 2021 - Kriegers Flak being the last to come into full operation.

Both Kriegers Flak and the near shore tender (Vesterhav Syd and Nord) have been won by Vattenfall.