'Common consensus' Denmark's next record-sized offshore wind tender will likely also fail
Sites of tender closing in April in Kattegat Strait and Baltic Sea are less attractive than flopped North Sea locations but auction has same risks for developers, Aegir Insights says
The North Sea sites were part of a 6GW plan to more than triple Denmark’s current offshore wind capacity by 2030 and rapidly reach 100% renewables in its electricity mix.
Denmark has already started its tender for the next three sites that jointly have a capacity for 2.8GW of offshore wind – Kattegat and Hesselø in the Kattegatt Strait that links the North and Baltic Seas, and Kriegers Flak 2 in the Baltic Sea close to the sea border with Germany and Sweden.
In a report on last week’s failed Danish auction, Aegir Insight’s Hwan Jensen pointed to less attractive site fundamentals at the Kattegat and Baltic Sea sites, while they entailed the same risks as the North Sea sites that flopped in last week’s auction.
Among risks identified by Hwan Jensen are strict delivery timelines which foresaw a completion by the end of 2030 coupled with high delay penalties, supply chain bottlenecks, an uncertain route to market, a 20%-state co-ownership, and no provision of a grid link by the state.
“The auction framework for Kattegat, Hesselø and Kriegers Flak 2 entail the same risks as the North Sea 1 sites,” he said in the report.
Hwan Jensen also points to the fact that the climate and energy ministry had actually removed the Kattegat and Hesselø sites from its last annual climate forecast and concluded they would not be profitable.
“The time perspective of the market dialogue and a potential re-launch of the auction with a set of intermediary amendments is currently unclear,” the analyst said.
“Whether this is possible within a short time frame is unknown, as many challenges mentioned are explicitly framed in the political agreement governing the auction, thus requiring to be re-negotiated, which will take time.”