The latest major offshore wind auction in Europe has concluded, the first to do so since the coronavirus pandemic took hold. The results, and the level of interest, could offer some guidance on the offshore sector’s resilience in the face of unprecedented uncertainty. It could also gauge the appetite of oil majors to take a piece of the offshore wind pie.
The Hollandse Kust (noord) Zone will be home to an offshore wind farm of “at least” 700 megawatts, according to the Dutch authorities. Bidding in the auction has been underway for a month, with the deadline passing on Thursday night.
Network operator TenneT will construct the grid connection. The tender is the fifth of five 700-megawatt offerings for this particular area of the Dutch North Sea, to the west of Amsterdam.
The next zones up for grabs are farther out to sea, so this is the last one relatively close to the shore. The Netherlands is targeting 11.5 gigawatts of offshore wind by 2030, with 6.1 gigawatts of additional tenders to come by 2026.
The Netherlands Enterprise Agency (RVO), which runs the tender process, said it had received “several bids” and would announce the winner within the planned 13-week assessment period. When contacted by GTM, no further details on participation could be shared. A full list of bidders will be released once the winners have been revealed.
Vattenfall, the winner of the previous two Dutch tenders, said it would not participate. German utility EnBW also said it would not be participating.
“The reason is really due to the uncertainties that we now see due to the coronavirus situation; we have decided not to continue that process,” said Magnus Hall, CEO of Vattenfall, during the company’s most recent results call.
On the other hand, market leader Ørsted confirmed it would be participating. It won the Borssele 1 & 2 projects, which are currently under construction.
"We delivered a strong bid with a high degree of risk mitigation. We commend the Dutch government for holding on to its tender timelines and its renewable energy targets during a time of global uncertainty,” said Martin Neubert, chief of Ørsted's offshore business.
“We urge governments worldwide to continue the transition...to green energy at full speed in order to fight climate change and promote sustainable investment in economic growth and job creation," Neubert said.
Dutch hydrogen appetite could seed interest
While the two dropouts send a clear signal that interest in the auction may be impacted by the pandemic and the recession to follow, there are other longer-term incentives for being involved in Dutch projects.
"I'd expect lower interest given some offshore developers are focusing on executing on existing pipelines,” Bloomberg New Energy Finance’s head of wind research, Tom Harries, told GTM in an email.
“On the flip side, oil and gas companies are hunting for opportunities," Harries said. "Some developers see hydrogen production as a key component of their bids. It's attractive to government given it contributes to deeper decarbonization, but it complicates the project, and risk mitigation is a key category. [...] Like most offshore auctions, an existing portfolio nearby to leverage servicing synergies could be the difference."
The Dutch government has a national green hydrogen strategy as it looks to take advantage of its extensive ports and industrial clusters along its coastline.
Previous bidders in the Dutch offshore wind tenders include a consortium featuring Shell and the Dutch utility Eneco. Shell narrowly missed out with a bid to buy Eneco last year. It lost out in the bidding to Japan’s Mitsubishi, co-owner (once-removed) of offshore wind turbine manufacturer MHI Vestas. Shell and Eneco both declined to comment on their participation in the latest tender when contacted by GTM.
Shell is part of a feasibility study into a green hydrogen hub in the Netherlands that would be the world’s largest and would require several gigawatts of offshore wind to power the electrolyzers.
Eneco is part of an early-stage hybrid project that would combine offshore wind and (offshore) hydrogen production with existing gas pipelines.
Shell reaffirmed its commitment to low-carbon spending during its quarterly results on Thursday, despite making cuts across the business. The company cut its shareholder dividend by two-thirds, the first cut of any kind since World War II.