Vattenfall Wins Danish Wind Farm Tender, but Project Still in Doubt
Swedish utility Vattenfall won a tender on Monday to build two offshore wind farms for Denmark, but could yet have the project pulled by a government worried about the cost of renewable energy subsidies.
The winning bid was to produce power from two wind farms off the west coast of Denmark, called Vesterhav Nord and Vesterhav Syd, for 0.475 Danish crowns ($0.0716) per kilowatt-hour (kWh).
But with wholesale power prices currently well below that level - around 0.22 crowns per kWh - that would mean taxpayers making up the difference in subsidies.
Denmark, which produced more than 40 percent of its electricity from wind power last year, has seen subsidy costs to the industry soar due to a sharp drop in power prices since 2012, leading the government to cut back on renewable projects.
Energy Minister Lars Lilleholt showed little enthusiasm on Monday for the new wind farms.
"By not erecting the mills, we can cut the large bill from the green transition," he said.
The future of the project will be debated in broader budget talks this autumn. Despite opposition from the minority government, the project still has the support of a majority in parliament.
Vattenfall, which will become the largest offshore wind operator in Denmark if the project goes ahead, called for a quick decision.
"It is a very confusing message to send and it creates a completely unnecessary uncertainty about what Denmark wants. Nobody understands what is happening in Denmark right now," Ole Bigum Nielsen, Vattenfall's country manager for Denmark, told Reuters.
"Now we have to discuss the risk of investing in Denmark, and we have never discussed that before," he added.
Vattenfall expects the project to generate 5,000 jobs over three years and 50-100 permanent jobs in operations and maintenance.
(By Nikolaj Skydsgaard, Additional reporting by Erik Matzen)
