Market consultation on 2017 zero subsidy tender criteria

Following the recent zero bids, the Dutch government is revising its tender scheme to allow for zero subsidy bids in the upcoming tender of the wind areas Hollandse Kust I and II. In this tender parties will first be asked to submit bids for the development of the windparks without subsidy. If this tender does not result in eligible bids, a tender for development with subsidy will take place.

In relation to the zero subsidy tender, the Ministry has now published the draft ranking criteria for consultation. According to the explanatory notes to the consultation document, the Ministry aims for the 2017 Tender Regulations to be as much as possible identical to the previous two tenders in relation to Borssele.

The tender will determine to whom a wind permit is awarded. Permit applications must satisfy criteria that are identical to the eligibility criteria under the Borssele tenders (i. e. the development and operation of the wind park being achievable and technically, financially and economically feasible; construction being able to start within four years of the date on which the permit has become irrevocable; and compliance with the site decision). Applications that do not meet these criteria will be disregarded. In the ranking of eligible applications the biggest emphasis is placed on the assurance that the parks will be operational on time and are able to operate on an ongoing basis.

The ranking shall be based on the following criteria:

• Knowledge and experience of the parties involved in relation to the development of offshore wind parks;
• Quality of the wind park design (in addition to compliance with the site decision and the Water Act, this requirement regards the planning as part of the design);
• Wind park capacity (the larger the capacity, the higher the ranking);
• Social costs (the more electricity is generated by the wind park, the more efficient the use of the offshore grid and thus the lower social costs will be);
• Quality of risk assessment and analyses (this regards the development of the electricity price, the value of guarantees of origin, construction risks and risks during operation);
• Quality of measures to guarantee cost efficiency.

Each of the above criteria are elaborated on by the Ministry in its consultation document, that sets out the sub- criteria, quantitative standards, assessment criteria and their weighting.

The wind permit will be granted to the bid with the highest ranking. The manner in which the winning bid meets the ranking criteria will become an integral part of the wind permit, and shall have to be maintained. The explanatory notes indicate that the flexibility to amend a project post-permit award will be maintained as much as possible, provided that the project would have obtained the same or a better ranking on the basis of the envisaged amendment.

It is expected that the final 2017 Tender Regulations shall be published in October. The tender in relation to Hollandse Kust I and II is expected to take place in December 2017.

The proposed amendments are temporary measures that provide for a pragmatic solution allowing the Hollandse Kust I and II tender to take place this year. This solution may also apply to the 2018 tender. In parallel, the Ministry of Economic Affairs is currently working on a structural solution: the legislative amendment of the Offshore Wind Energy Act. This amendment shall be completed by the new government.

For more information, please contact the authors.