Europe is becoming a wind powerhouse, with wind accounting for 15% of Europe’s electricity supply. The EU commission sees wind generating half of Europe’s electricity by 2050, with capacity rising from 190 GW today to up to 1,300 GW. Based on this prediction, offshore wind will experience a 25x increase to 45 GW installed in the EU. So what is the current pipeline for offshore wind in Europe?
Who will be auctioning in 2023?
In the race to dominate the offshore wind market and fulfil targets, countries throughout Europe will be hosting auctions to bring developers to their waters, France being one of them. France is currently auctioning 1GW per year until 2025. France launched tenders for two offshore wind farms with a total capacity of 2.5 GW and shortlisted 13 pre-qualified bidders. The government will be awarding projects towards the end of 2023 through a competitive process. For those who didn’t pre-qualify for France’s offshore wind auction, Germany is offering major offshore wind opportunities.
Germany is one of the leading countries in offshore wind, targeting 30GW by 2030 and 40GW by 2035. From 2023 onwards, auctions will be awarded in a two-track regime: surveyed sites via an auction and non-pre-surveyed sites based on a qualitative auction.
On track with the announcement that auctions will take place every year until 2033, Germany’s Federal Network Agency is currently hosting an offshore wind (OSW) auction of three sites in the North Sea and one site in the Baltic Sea. These sites have a total capacity of 7 GW and are non-pre-surveyed sites, meaning bidders will need to conduct pre-investigations. All bids for this auction must be submitted by the 1st of June 2023.
Germany also recently opened their second auction round for 2023. The auction includes four pre-examined offshore wind sites meaning they are centrally pre-investigated by government authorities and therefore bidders are not required to conduct pre-investigations. These sites offer 1.8 GW of capacity. Bids must be submitted by August 1st of 2023.
In Ireland, seven offshore wind projects have been designated as “Relevant Projects” and are eligible for the country’s first auction after being awarded Maritime Area Consents (MACs) in December of 2022. Relevant projects include Oriel Wind Park, Dublin Array (Bray and Kish Banks), Codling Wind Park I and II, Fuinneamh Sceirde Teoranta (Skerd Rocks), and North Irish Sea Array (NISA). The process closes in May 2023 and final results are expected in July 2.
Norway is hosting its first offshore wind auction in 2023 and officially opened the application window in March of this year. The auction includes two areas on the Norwegian continental shelf, Soerlige Nordsjoe II phase 1 and Utsira Nord, with a combined total capacity of 3 GW. The first area, Soerlige Nordsjoe II, will be awarded following a prequalification of 6-8 bidders. The area, Utsira Nord, the Ministry proposed to award three project areas but grant state aid to only two of the projects. A competition for state aid will be held following maturation and impact assessment of the three projects selected. The project that does not receive state funding will likely retain the right to the area for an extended period of time and may participate in future competitions or seek alternative funding. To participate, bidders must apply by August 1st 2023 for Soerlige Nordsjoe II and September 1st 2023 for the Nordsjoe II. The Ministry’s announcement outlines the application and auction process.
Round 5 of the UK’s contract for difference auction opened March of this year and is expected to close by May of 2023. Although dates are unknown, the UK will also be hosting a floating offshore wind tender in mid-2023 for areas in the Celtic Sea. The Crown Estate has identified five Refined Areas of Search within five broad Areas of Search. The Crown Estate details each of these areas in its GIS portal and the process of refinement. These areas will unlock up to 4GW of floating wind energy.
Several offshore wind markets will be hosting tenders in 2023 that have yet to announce definitive dates, including Belgium, the Netherlands and Denmark. Denmark’s Climate, Energy and Utilities Minister, Lars Aagaard, announced in February of 2023, that the country will begin auctioning 9GW of offshore wind capacity in 2023 via state tenders.
Countries new to commercial-scale offshore wind with plans to auction in 2023 include Lithuania, Spain, and Portugal. According to the Portuguese government, Portugal will begin auctioning in the third quarter of 2023, targeting 10GW of installed capacity by 2030.
In most upcoming European OSW auctions bidders need to qualify to participate. For example, bidders in Norway will need to demonstrate their technical competence, financial strength, and meet relevant requirements for health, environment and safety through prequalification criteria based around implementation ability, sustainability and positive local effects. Applicants who are prequalified will then have the opportunity to participate in the auction. In auctions with non-pre-surveyed sites, for example in Germany, developers must investigate and mature the areas.
How can OWC help?
As many of these tenders are in countries that are new to the OSW market, have complicated permitting regulations, or new bidding formats, thoroughly understanding these markets and preparing for the bidding process and pre-development post-auction is crucial. OWC has successfully supported developers in auction processes in Europe and globally and continues to offer the expertise needed to guarantee success in these markets.
Offshore wind leasing and auction preparation require a thorough understanding of regulatory requirements and procedures. Our global footprint, through the ABL Group, of more than 300 locations, allows us to apply local market knowledge in every wind energy hub across the world. We provide strategic and regulatory advice for informed decision-making and market entry, including:
- Bidding and auction support
- Regulatory and permitting support
- Pre-development cost engineering
- Route-to-market Strategy
- Market structure analysis
- Power sales regulations and requirements
- Power generation mix
- Power prices
- Competitive cost of energy assessments
- Site investigation and identification services
- Wind measurement and energy yield analysis