The Danish wind industry has taken a hit after not a single bid was received for tenders for three offshore wind farms in the North Sea.
On December 5, the deadline expired for energy companies to bid on whether and how they would build the largest offshore wind turbine complex in Danish history.
“The Danish Energy Agency has not received a single bid for any of the three offshore wind farms in the North Sea tendered”, the agency wrote in a press release on December 5.
“A total of 6GW has been put out to tender… successful bidders are free to establish more than the minimum capacity of 6GW, potentially as much as 10GW offshore wind or even more,” it said.
“Danish offshore wind farms currently have a total capacity of 2.7GW.”
Under the plan, a concession payment was to be combined with 20 per cent state co-ownership, making the Danish State a minority owner in each project. But the government claimed it wanted to avoid state aid for the offshore wind turbines.
Minister for Climate, Energy and Utilities Lars Aagaard said the outcome was “very disappointing”.
“It’s really disappointing and it wasn’t at all the expectation when we entered into the offshore wind agreement a year and a half ago. At that time, we were told there was huge interest in building but, unfortunately, the reality has changed since then.”
Aagaard said that the lack of interest did not provide “fertile ground for great optimism for the next three parks”.
Denmark has heavily invested in offshore wind energy, aiming to generate significant revenue from it. Recent price increases, though, have undermined those expectations. A cost surge of €6 billion has raised concerns that, instead of yielding a profit, the venture could have resulted in substantial losses for taxpayers.
Social Democrat MP and former environment minister Lea Wermelin said the failed tender process jeopardised the future of the Bornholm Energy Island, as part of the financing behind it was to be obtained from the North Sea projects. The project is planned to consist of an offshore wind farm south of Bornholm with a 3.8GW capacity as well as high-voltage installations on Bornholm and Zealand.
Martin Lidegaard, leader of the Social Liberal Party said the failure was “a disaster for climate and security policy”.
Following news of the zero bids, Christian Democrat Frederik Bloch Münster said on X it was “the least surprising news ever”.
“Because, funnily enough, they [companies] are not interested in investing time and money in a bureaucratic nightmare where the state absolutely must be a co-owner.”
Senior researchers are sounding the alarm over the increasing grip China has on the European Union’s wind energy sector. https://t.co/3NPEWTEiH6
— Brussels Signal (@brusselssignal) October 16, 2024
“The ‘green’ transition in Denmark has just come to a standstill,” Kristian Jensen, CEO of Green Power Denmark said in a press release on December 5.
Jensen noted that the North Sea offered some of the best conditions in the world for offshore wind turbines, with constant wind and shallow seas.
According to the CEO of Green Power Denmark, high inflation, rising commodity prices and significantly higher interest rates than a few years ago has put pressure on the financing of such projects.
“However, the economic conditions in the market are not the whole explanation … the conditions are often such that the state pays for grid connection and there is a possibility of state aid,” he noted.
Jensen pointed out that investors “don’t know whether they can sell the energy from the wind turbines at a reasonable price.
“The transition to electrifying the heating of our buildings and industrial production is progressing too slowly. And there is still a great deal of uncertainty about whether it is possible to sell electricity in the form of hydrogen”.
The failure to receive any bids “creates a critical situation for the wind turbine industry and is a huge setback for the green ambitions,” Jensen said.
He called for politicians to “deal with the fact that wind turbines are not money trees. These are tools that will make us independent of fossil energy and hostile powers.”
Samuele Furfari, professor in energy geopolitics, told Brussels Signal in a reaction to the news: “It has long been known that offshore wind power is an economic black hole. Around 15 years ago, a lobbyist from a major, well-known multinational corporation in the sector candidly told me that they only invested in offshore wind because they were politically compelled to do so.
“Later, during a G20 summit in northern Germany, which included a helicopter visit to an offshore wind farm, a visitor remarked to me that the visit highlighted the hidden challenges.
“It’s not hard to understand why. Offshore capacity factors are only 5–7 per cent better than onshore, but at what cost! When you drive along a road past a wind farm, you almost always notice one or more turbines out of order. These machines are fragile. So, imagine trying to carry out repairs at sea?,” Furfari said.
“The failure of intermittent and variable renewable energy sources can no longer be concealed. The same applies to the hydrogen utopia, with the two absurd policies being closely connected.
“The European Commissioner for Energy, a Danish anti-nuclear environmentalist, will have to rethink his ideology,” he concluded.
Also on December 5, British oil and gas giant Shell announced it was stepping back from new offshore wind projects as part of a wider update to its energy strategy.
VIDEO: @FurfariSamuele, professor in energy geopolitics at the Brussels Free University, tells @JustinStares that many lawmakers in Brussels are convinced the EU’s energy policy is disastrous but are too afraid to speak up. https://t.co/Rr7n9ObyTi
— Brussels Signal (@brusselssignal) October 2, 2024
Update:
Reacting to questions by Brussels Signal regarding the future of the Bornholm Energy Island, Volker Gustedt, a spokesperson of 50hertz, one of the main companies behind the project, said there was more to consider.
“Bornholm Energy Island is a cross-border project. It will allow planned wind farms in Danish waters to access the Danish and German extra-high voltage grids and thus the respective electricity markets via a hybrid interconnector. The economic framework conditions are different from those for wind farms that are to be connected exclusively to the Danish electricity grid via a radial connection and thus to the more limited Danish market.”
