Winds of Change Blew Through Offshore Wind, and Denmark Missed It

Analysts said that the failure of Denmark to receive any bids for an offshore wind energy tender this week is due to a rigid auction system, a failure adapt to a changing economic reality and increased competition.

It was a major blow for Denmark, the home of turbine manufacturer Vestas, and offshore developer Orsted. Both companies have been pioneers in both onshore and offshore wind power.

The Danish North Sea tender, for a minimum of 3GW of capacity, did not offer any subsidies. Instead, it invited competition for payments to be made over 30 years by the state. It would also hold a 20% stake of each project.

Soren Lassen is the head of Wood Mackenzie's global offshore wind research. He said that the way the auction is designed reflects past costs and not current ones of building offshore winds. He said that instead of taking money from developers, Denmark should look at what they could offer them.

WindEurope, a lobby group for the industry, said that because Denmark's system doesn't offer subsidies or revenue stability, it is less attractive to developers than similar offshore auctions held in Poland, The Netherlands, and Britain.

The Danish tender for Thor's 1 GW wind farm in 2021 was so fiercely contested that developers were willing to pay for rights. It was finally decided by a German lottery, won by RWE.

But over the last three years, offshore wind has been hit with rising costs, increasing interest rates, and supply-chain bottlenecks.

(Reuters)