Offshore Wind Incentives for Project Developers

Another country is moving away from “zero-subsidy” #offshorewind auctions: The Netherlands will introduce Contracts for Difference (#CfD) to de-risk projects. 🤑 𝐓𝐡𝐞 𝐛𝐨𝐨𝐦 𝐲𝐞𝐚𝐫𝐬 For years, #wind #offshore was thriving. Governments auctioned offshore sites and reaped billions for state budget. Expecting revenues from selling electricity would significantly exceed cost, wind developers were willing to bid substantial sums to gain access to sites. Peak: Germany 2023, when bp and TotalEnergies paid EUR 12.6 billion for 7 GW. 🚧 𝐓𝐡𝐞 𝐬𝐡𝐢𝐟𝐭 But costs surged ~40% in two years, driven by Covid, the Ukraine crisis, and supply chain woes. Falling power price expectations left developers unwilling to build without state backing. Recent “zero-subsidy” auctions in Denmark (Dec 2024) and Germany (Aug 2025) failed to attract a single bid; the Netherlands delayed its May 2025 auction to October to avoid an unsuccessful auction. ⏭️ 𝐆𝐨𝐯𝐞𝐫𝐧𝐦𝐞𝐧𝐭 𝐫𝐞𝐬𝐩𝐨𝐧𝐬𝐞 🔸 #Denmark is holding a 3 GW auction in October with 20-year two-sided CfD, giving both price and volume security to developers. 🔸 #Norway has recently allocated floating offshore project sites in a first phase, which will be followed by a second phase where the winner will receive a direct grant of up to NOK 35 billion (around EUR 3 billion) to develop 500 MW. 🔸 #Germany is considering to introduce two-sided CfDs, as just highlighted by Minister Katherina Reiche this week. Details - e.g. whether production-dependent or -independent - still to be determined. Consultation expected soon. Also TBD whether this can be implemented for 2026 auctions already, or whether it needs intermediate solutions or a delay of the auction. 🔸 And now the #Netherlands announced to introduce CfDs as of 2027 (details still to be determined). Intermediate solutions until then: Relaxation of conditions for the October auction and access to EUR 1 billion in subsidies next year for 2 GW (details TBC). Jens Perner Michael Zähringer Patrick Peichert Maria Paula Torres Figueroa Lyuba Ilieva Fabian Schrogl

Several positive offshore wind news yesterday 🇳🇴🇩🇰🇺🇸 🇳🇴 re-launched the Utsira Nord (floating) tender, finally. Some observations: 👉 Qualitative criteria updated to focus more on price and execution capabilities, favoring larger and more experienced developers 👉 Three winners get to continue developing their projects towards a later offtake auction. This will likely result in developers seeing it as a 'cheap' option and government branding the award as a 'success' with >5 received bids 👉 Up to 35 bn NOK (3 bn EUR, i.e., up to 6 mEUR per MW) awarded as investment support to the final winner a few years from now - this is the first real test of whether floating wind will be built in Norway (FID is the ultimate stamp of success) 🇩🇰 re-launched the North Sea tender, showing strong government commitment to offshore wind: 👉 Now two sites in the North Sea and one by Hesselø (🤔), a total of 3 GW capacity plus allowed overplanting 👉 Staggered tender for NS1 and NS2, providing more information (less uncertainty) to the bidders 👉 Up to 55.2 bn DKK (7.4 bn EUR, i.e., up to 2.5 mEUR per MW) of subsidies, awarded as a capability-based CfD. This is very interesting since subsidies are de-coupled from actual power generation, possibly favoring developers with strong offtake capabilities 🇺🇸 lifting the Stop Work Order on Equinor's Empire Wind 1 project 👏 While this is of course great news for everyone involved, it is a bit sad that we have to celebrate this at all.

Dutch Cabinet Updates Requirements for New Offshore Wind Farm (translation News Release | 16-05-2025 | 17:58 CEST) This October, companies will be able to compete for the permit to build and operate a new wind farm in the North Sea. For the Nederwiek I-A Wind Farm Site, the tender criteria are being adjusted to improve the business case for offshore wind. The Minister for Climate and Green Growth is taking these measures to make the upcoming tender round more attractive and to ensure offshore wind farm construction continues at a realistic pace. Offshore wind energy is essential for our current and future energy system. It is a relatively affordable and easily scalable source of clean energy. For this reason, the cabinet has designated the Nederwiek I-A Wind Farm Site for the next offshore wind farm. This wind farm will have a capacity of 1 gigawatt (GW), which will supply about 3.5% of the Netherlands’ electricity consumption. Fewer Wind Farm Sites and Eased Tender Requirements The IJmuiden Ver Gamma-A and Gamma-B Wind Farm Sites (2 x 1 GW) were also initially planned for this tender round. However, due to worsening market conditions for offshore wind projects—partly caused by the lack of a large-scale increase in electricity demand—Gamma-A and B will be tendered at a later date. The rules and criteria for the Nederwiek I-A tender are also being eased. It was previously announced in September 2024 that the Wind Farm Site size would be reduced from 2 GW to 1 GW. This lowers the required investment per Wind Farm Site, reducing financial risk for wind farm developers. Additionally, the maximum liability for a developer is limited during the first two years of the permit. During this period, the developer can ask the minister to revoke the permit in exchange for the bank guarantee—should market conditions prove too unfavorable to continue developing the wind farm. The cabinet has also relaxed the evaluation criteria for bids from wind farm developers. These criteria encourage innovations in areas such as ecology and circularity. By relaxing them, the associated costs for implementing such innovations can be reduced. Moreover, the voluntary financial bid will only need to be paid starting from the realization of the wind farm, rather than at the time of permitting.