Wind Energy – Non-price Criteria
The Netherlands are about to close the bidding in their latest offshore wind auction – for the Hollandse Kust West site.
There are two different areas up for auction with a total 1.5 GW of capacity. The auction makes extensive use of non-price criteria. It’s by some distance the most advanced use of non-price criteria yet in any wind energy auction. The focus of the criteria is ecology and system integration.
The two available sites in the auction each apply different criteria. At ‘Site VI’ bidders have to focus on how the project impacts the ecosystem in the North Sea. 50% of the scoring is related to this.
The criteria cover how the project will contribute to limit negative effect on birds and marine habitats. Bids that incorporate knowledge sharing and further R&I on this will also get more points.
The other site ‘Site VII’ then focuses on how well the wind farm will be integrated into the Dutch energy system. Again 50% of the scoring is related to this. The criteria cover the investments the project envisages in system integration and knowledge-sharing around it, e.g. through energy storage or the use of HVDC cables. At least one prototype pilot should be in operation 60 months after the permit is awarded.
Non-price criteria in wind farm auctions help recognise and reward the added value that wind energy brings. Up until recently wind farm developers bidding into auctions focused solely on reducing the cost of their offshore wind farms, because price (of the electricity they generate) was the only criterion.
The Dutch Government will not provide any financial support for the Hollandse Kust West project. They’re actually basing 10% of the scoring on how far bidders are ready to offer to pay the authorities up to €50m.
This is negative bidding in practice: developers paying the government for the right to develop the project. It is positive at least that 50% of the scoring is on the non-price criteria.