Wind Energy – Tender
One of the most notable updates to the upcoming Danish 3 GW Offshore Wind Tender is the introduction of a capability-based two-way CfD, which, unlike traditional CfDs, will be settled based on the potential generation of the wind farm rather than actual output.
This novel mechanism, developed by the Energistyrelsen with the support of DTU Wind and Energy Systems, aims not only to balance developers’ needs for managing price risk but also to create stronger incentives for how the new offshore wind capacity is dispatched in a manner that improves market integration.
Although it is a somewhat more complex process to establish a fair basis for determining potential generation under the proposed model, it’s clear that the DEA has engaged extensively with developers and adapted the model to accommodate feedback and issues along the way.
This new mechanism could mark a significant evolution in renewable CfD design and serve as a key reference for other markets in the future, so this process is definitely worth watching!
The Danish consultant and advisor Lars Henrik Juel had the chance to visit the DEA for an update on the offshore wind tender yesterday, and he experienced it as very encouraging to hear that they are still on track to publish the tender terms before the end of autumn.
On LinkedIn, Lars shared some insights on how the model has been adapted based on developers’ feedback. “Most updates seem to originate from feedback on the methodology for populating the Available Active Power (AAP) table, which determines the CfD model’s calculation of the wind farm’s production capability across different wind speeds, wind directions, and turbulence intensities. I believe the updates provide a much clearer, transparent, and manageable framework for developers that could provide them with greater confidence and predictability when estimating potential support levels under the CfD.”
