The second Borssele offshore wind farm in the Dutch North Sea is expected to be constructed and operated with a subsidy of just 0.3 billion euro. The originally anticipated subsidy was 5 billion euros. The wind farm will be built by Shell, Van Oord, Eneco and Mitsubishi/DGE in the consortium Blauwwind II c.v.
With this second wind farm in the Borssele Wind Farm Zone, the subsidy savings are even higher than for the first 700 MW wind farm, which at the time was set to be the world's cheapest offshore wind farm. Moreover, with the current energy price outlook, the second wind farm in Borssele can be operated without subsidy after 7.5 years.
In total, 26 bids from seven parties/consortia were received in the tender to secure permits and an associated SDE+ subsidy for the two projects at Borssele Wind Farm Site III and IV. The maximum subsidy available for this tender was capped at 11,975 euro cents per kilowatt hour. This amount excludes costs for connecting the wind farm to the electricity grid (which is the responsibility of state TSO TenneT (transmission system operator)). The winning consortium bid 5.45 euro cents per kilowatt hour. By comparison, DONG Energy Borssele 1 BV won the previous tender with a price of 7.27 euro cents per kilowatt hour.
Announcing the tender result, Minister of Economic Affairs Henk Kamp said: “If the electricity price develops as we expect, in 7.5 years’ time subsidies will no longer be required for the production of electricity from offshore wind farms. That brings the Government's goal for renewables to compete with fossil fuels without subsidy within reach. The Netherlands is a front runner in the development of offshore wind energy, creating many opportunities for Dutch industry. With these winners this becomes even more clearly visible.”
Energy transition offers economic opportunities
The Dutch government is working on the realisation of five wind farms - the largest offshore wind projects worldwide. Major cost reduction is being achieved step-by-step. This will not only promote the transition towards renewable energy, it will also benefit the people and industry in the Netherlands, and the Dutch economy generally.
“The realisation of the offshore wind farms is a boost for the industry. We expect around 10,000 jobs to be created by these projects by 2020. Dutch industry is involved in the construction of almost all offshore wind farms in Europe. Last week the government presented the Energy Agenda, which sets out its roadmap towards a low carbon energy supply. The results of this latest tender demonstrates that the energy transition offers ample economic opportunities,” Minister Kamp said.
This latest tender involves the second of five planned wind farms, all expected to be operational by 2023. Each wind farm has a capacity of 700 MW and will produce electricity for a million households. The Borssele wind farms will be built 22 km off the coast.
Government creates favourable conditions
The Government supplies companies with the conditions required to build and operate wind farms at the lowest possible cost: a good location, detailed site data, water and wind conditions, permits and a grid connection. The company that offers to build the wind farm at the lowest cost receives both a 15-year subsidy and 30-year permit to build and operate the wind farm and then decommission it. This clear policy creates certainty and investor confidence for the offshore wind sector, enabling costs to decrease further. The government wants to boost investor confidence by providing a longer term perspective for offshore wind energy, as shown in the Energy Agenda presented last week.