DENMARK WEAVES THE GREEN TRANSITION INTO OFFSHORE TENDERS

In connection with the Climate Agreement on Green Power and Heat 2022, the Danish Government set a clear goal of introducing several sustainability requirements in future offshore wind farm tenders. We prepared a two-part report for the Danish Energy Agency (DEA) that reviews possible concepts for award criteria in different tender models and analyses alternatives compared with price auction. 

Denmark has ambitious plans to expand offshore wind with up to 12 GW by 2030. Following a political agreement to bring sustainability and social considerations into focus when utilising offshore wind resources, the DEA is to set new frameworks for future tenders. We assisted this process with a two-part report.  

The analysis sheds light on possible models where tenders are awarded solely on price (and where, for example, system integration, sustainability, nature and environment and innovation are included as minimum criteria), but especially models where both price and qualitative (non-price-related) criteria are included as award criteria.  

The focal point of the analysis are the five pillars selected by the DEA: system integration, sustainability, nature and environment, innovation, and economy.  

FOREIGN EXPERIENCES FOR AWARDING OFFSHORE WIND 

The first part of the report reviews international examples from Germany, Belgium, the Netherlands, the United Kingdom, and the United States. The analysis of offshore wind tender models reveals that while price-based auctions are prevalent, countries are increasingly incorporating qualitative criteria into their evaluation processes. In the Netherlands, qualitative criteria including nature and environment (biodiversity) and system integration have already successfully been implemented for two awards in 2022, while Germany and Belgium plan to introduce similar measures. There are, however, challenges in defining and implementing objective standards for these criteria. 

ASSESMENT OF AWARD CRITERIA FOR OFFSHORE WIND TENDERS IN DENMARK 

The second part of the report is based on the feedback from Danish offshore wind developers, industry, stakeholders, and other experts including Ørsted, Copenhagen Infrastructure Partners and Copenhagen Offshore Partners, the Confederation of Danish Industry, Energinet, the Danish Technical University (DTU), and the Danish Environmental Protection Agency – amongst others.  

Integration of the five pillars into the award criteria are discussed in short- and long-term scenarios, and recommendations are highlighted to achieve objective standards for the qualitative criteria. 

Denmark's plan to expand offshore wind energy represents a significant step towards the green transition. The analysis of award criteria in different tender models provides insights into the importance of sustainability, system integration, nature and environment, innovation, and economic considerations. Balancing these factors, while ensuring a successful transition and attracting bidders with the necessary technology, remains a challenge. Nevertheless, Denmark's commitment to renewable energy and collaboration with industry experts and researchers will help shape effective award criteria for offshore wind tenders in the coming years.