What onshore can learn from offshore tendering Mark Duppen BLIX Consultancy - 13 June 2018
CONTENT From offshore to onshore - Can we trigger the same cost reduction? 1. Lessons learned from the Offshore Wind Tenders 2. How would this apply to Dutch Onshore Wind 2
LESSONS LEARNED From the offshore wind tenders What are the main factors influencing strike price? 1. Technology factors 2. Market factors 3. Policy factors 4. Finance factors Low bids at Borssele are a combination of all 3
LESSONS LEARNED Government involved industry in policy development Consultation rounds with government and industry: Government placed themselves in shoes of developers Framework for tender system was developed in cooperation with industry and government 4
LESSONS LEARNED Competition through tender Introducing competitive tender for lowest strike price: Competition stimulates parties to reduce cost and innovate Level playing field to stimulate competition Minimal uncertainties (timeline, permit, site data) 5
LESSONS LEARNED Clear consenting procedure Government executes Environmental Impact Assessment: To reduce early development risk and cost Government provides irrevocable permit: With envelop for main technological characteristics Allowing flexibility for changes after award 6
LESSONS LEARNED Large wind farm sites and phased approach Large wind farm sites: Allow for economies of scale Phased approach of five tenders in a row: Provides stable outlook for investments 7
LESSONS LEARNED Grid connection certainty State-owned TSO TenneT provides grid connection: To reduce development risk and cost 8
LESSONS LEARNED Government provides state of the art site data Government provides site data package: To minimize early development risk and cost Allow tenderers to optimize design, planning and business case 9
ONSHORE TENDER Government provides state of the art site data Site data package: Obstructions existing infrastructure, archaeology and UXO Wind wind resource assessment, metocean campaign Water comprehensive metocean database Soil geophysical, geotechnical, morphodynamic investigations Qualified as state-of-the-art 10
ONSHORE TENDER What do you tender onshore - options Assumption is that the government has: Land position Permit Site data (wind, soil) Grid connection Options to tender: Option 1: Bid for highest land lease fee SDE up to tenderer = risk Option 2: Bid for lowest SDE Fixed amount for land lease fee (can be zero) 11
DRIVERS What are the drivers for cost reduction using tendering RISK The key for reduction of cost of onshore wind is: Removing risk and uncertainties The party that can handle the risk or uncertainty best should do this The government should put itself in the shoes of the developer Generate a competition on the remaining risk and uncertainties the developers can handle best 12
ONSHORE TENDERING How to do it Government: Land / location MER + permits Site date (wind report, soil data, UXO, archaeology etc.) Grid connection Tender: Bid for lowest SDE Developer: Market risk Supply chain risk (turbine supply, contractors, etc.) Power price 13
Thanks for your attention Mark Duppen Senior Consultant markduppen@blix-bv.com +31 (6) 1030 3137 BLIX Consultancy BV 2 e Daalsedijk 6A, 3551 EJ Utrecht www.blix-bv.com info@blix-bv.com