Cancelling Wind Tender Could Dent Denmark's Allure

 

Swedish utility Vattenfall won the tender two weeks ago to build two offshore wind farms, but the Danish minority government has long wanted to cancel the project, because government subsidies to the industry have soared due to low power prices.

 

"It's possible that there will be companies, that will not participate in future procurements, if they see too much uncertainty in Danish tenders," Lars Lilleholt said at a parliament meeting Wednesday.

 

Vattenfall won the 350 megawatt near-shore project, located off the west coast of Denmark, in a bid to produce power at an industry low 0.475 Danish crowns ($0.0715) per kilowatt-hour (kWh).

 

The minister described Vattenfall's bid as very competitive, but said it should be legitimate to review tenders, if the premises have changed.

 

Since 2012 energy prices have dropped sharply causing Danish government subsidies for renewable energy to rise in order to ensure utilities receive a minimum price per kilowatt hour.

 

"The near-shore wind turbines are one of the reasons our energy policy has become so much more costly," he said.

 

A majority in parliament supports the project, which will make Vattenfall the largest offshore wind operator in Denmark if it goes ahead. The future of the project will be debated in broader budget talks this autumn.

 

A tender for the 600 megawatt Kriegers Flak wind farm in the Baltic Sea is currently open to bids, but one pre-qualified bidder already withdrew its offer in June.

 

The bidder, a consortium of Danish and German utilities, cited too large political risks as the cause for pulling out of the tender process, according to the Danish Wind Industry Association.