Vattenfall Wins 760 Megawatt Subsidy-Free Dutch Offshore Wind Tender

Swedish energy group Vattenfall has won the most recent subsidy-free offshore wind tender in the Netherlands, being awarded this week the right to build the 760 megawatt (MW) Hollandse Kust Zuid (HKZ) 3 & 4 offshore wind farm.

Vattenfall will begin offshore construction the 760 MW Hollandse Kust Zuid (HKZ) 3 & 4 offshore wind farm in 2022 with completion and commissioning required for 2023.

This is the second subsidy-free offshore wind farm to be awarded by the Government of the Netherlands following the September 2018 decision to award the right to build the 700 MW Hollandse Kust Zuid (HKZ) 1 & 2 offshore wind farm to Vattenfall. “As recently as 2016, the developer of the Borssele Wind Farm Zone was still receiving subsidies for the electricity it generated,” the Dutch Ministry of Economic Affairs and Climate Policy explained in its press release.

Image Credit: Government of the Netherlands

Vattenfall has promised to utilize economies of scale created by building all four Hollandse Kust Zuid to help reduce costs — so much so that, not only will Vattenfall not benefit from government subsidies to support construction, but will in fact pay around €2 million per year in ground rent for the seabed area where the offshore wind farms are being built.

“This is excellent news for Vattenfall, our partners and the Dutch energy transition,” said Magnus Hall, CEO of Vattenfall. “It means a significant step for Vattenfall in view of our ambition to make fossil-free living possible within one generation and to grow in renewable energy production. The Netherlands is an important market for us and this will be one of our biggest offshore projects. We are looking forward to contribute with this project to the transformation of the Dutch energy system.”

“Winning the bid for Hollandse Kust Zuid 3 & 4 is a result of our continuous efforts along our entire value chain and the solid track record and portfolio approach of our company,” added Gunnar Groebler, Senior Vice President and Head of Business Area Wind of Vattenfall. “Adding to that, working collaboratively with our partners in the supply chain has enabled us to hand in a state-of-the-art proposal for this project. We can bundle now the projects Hollandse Kust Zuid 1&2 and 3&4 which is a great advantage leading to further optimization and synergies.”

Vattenfall will utilize Siemens Gamesa’s SG 10.0-193 DD offshore wind turbines for all four wind farms.

The news was warmly welcomed by the European offshore wind energy industry.

“This auction shows yet again that offshore wind is now very competitive – and is consistent with Bloomberg data that shows offshore wind is now the cheapest form of new power in North Western Europe apart from onshore wind,” explained Giles Dickson, CEO of WindEurope, the region’s wind energy trade body.

“The ‘zero bid’ system seems to work in the Netherlands, because the Dutch share a lot of the project risk, and it’s not hard for wind farms to find corporate buyers for the power they produce. But in most European countries offshore wind auctions need to offer stable revenues – and this reduces the financing and therefore the total societal costs.

“The Dutch are doing well on offshore wind. They’ve a good steady auction plan of 700MW every year. They provide clear visibility of what they’re auctioning and when which helps reduce costs. They’re taking a strategic approach to grid investments – and a healthy long-term view of marine spatial planning aiming at happy co-existence between offshore wind and e.g. fishing and biodiversity. Their recent Climate Agreement sets a target of 11.5 GW total offshore wind by 2030: they could actually do more than this and should do once they factor in increased electrification in industry.”