The latest offshore wind auction in the Netherlands, for the Hollandse Kust West site, is about to close bidding.
A total of 1.5 GW of capacity is up for auction in two different areas. Non-price criteria are used extensively in the auction. It’s the most advanced application of non-price criteria in a wind energy auction to date. The criteria emphasize ecology and system integration, WindEurope notes.
Different criteria for two sites
In the auction, the two available sites use different criteria. Bidders for “site VI” must consider the project’s impact on the North Sea ecosystem. This accounts for 50% of the total score. The criteria address how the project will help to reduce negative impacts on birds and marine habitats. Bids that include knowledge sharing and additional R&I will receive bonus points.
The other site, “Site VII,” is concerned with the wind farm’s integration into the Dutch energy system. Again, this accounts for 50% of the total score. The criteria cover the project’s planned investments in system integration and knowledge sharing, such as energy storage and the use of HVDC cables. 60 months after the permit is granted, at least one prototype pilot should be operational.
Non-price criteria
In wind farm auctions, non-price criteria help to recognize and reward the added value that wind energy provides. Because price was the only criterion until recently, wind farm developers bidding in auctions focused solely on lowering the cost of their offshore wind farms.
The European Commission’s new State Aid Guidelines for Energy now allow non-price criteria to account for up to 30% of the scoring in Contract for Difference (CfD) auctions. Aside from the Netherlands, France is using non-price criteria for 25% of the scoring in its most recent offshore wind auction – for a 1 GW wind farm off the coast of Normandy. For part of their new offshore wind auctions, the German government has proposed using four non-price criteria. Belgium is also consulting on a long list of criteria.
The application of these criteria will recognize the societal value of wind energy. They will support the wind industry’s investments in these areas, such as the development of relevant technology.
Adhering to guidelines
It is critical that non-price criteria adhere to certain guidelines. They should be clear, comparable, easy to measure and assess, and they should be used in conjunction with existing policies. They should avoid incurring excessive administrative or management costs. They should capitalize on the strengths of the wind industry and encourage more innovation. They should also be comparable to criteria used in auctions in other industries, according to WindEurope.
The Dutch government will not support the Hollandse Kust West project financially. They’re basing 10% of the scoring on how much bidders are willing to pay the authorities up to €50 million. In practice, this is negative bidding: developers pay the government for the right to build the project. At the very least, 50 percent of the scoring is based on non-price criteria.
Image source: WindEurope
