Some practical aspects in the implementation of tenders: The Danish example for offshore wind

Transcription

1 Some practical aspects in the implementation of tenders: The Danish example for offshore wind Lena Kitzing, PhD candidate, Energy Systems Analysis 10 th IFIC Workshop, Brussels 24 October 2013

2 Practical aspects for implementing tenders When implementing tender schemes, usually one aspect is of crucial importance: COMPETITION We have been investigating tender schemes at the University in different research projects Denmark is a good case to discuss the potential implications of some practical aspects when implementing tender schemes 2

3 Tenders for offshore wind in Denmark Denmark has long experience with tendered auctions (starting in 2004) Three large offshore wind parks have successfully been developed through tenders Tenders for two more offshore wind parks are currently under development All tenders are for Feed-in Tariffs (guaranteed prices) for full-load hours, ca years of operation Let s look at some practical aspects first: 1. Procedure 2. Timing 3. Bidding and then go into more detail with: 1. Penalties 2. Stand-by requirement Horns Rev MW 2020 Horns Rev MW Sep 2009 Rødsand MW Oct 2010 Anholt 400 MW Sep 2013 Kriegers Flak 600 MW

4 Tenders for offshore wind in Denmark HornsRev 2 Rødsand 2 2 nd Rødsand 2 Anholt Horns Rev 3 / KriegersFlak Procedure Negotiated Negotiated Single-tender Single-tender Negotiated Timing Tender Start First bid Final bid Contracted Time to build (expected / realised) * Jul 2004 Jan 2005 Jun 2005 Jul years / 4 years Nov 2004 Dec 2005 April 2006 May years / Feb 2008 Apr 2008 Apr years / 2.5 years Apr 2009 Apr 2010 Jun years / 3 years 2014/2015 exp years Bidding Pre-qualific. Final bids Winning bid 4 parties 3 parties 69.5 EUR/MWh 4 parties 3 parties 66.9 EUR/MWh 2parties 84.4 EUR/MWh 1 party EUR/MWh * from winning of bid to full commissioning 4

5 Why the low interest for the Anholttender? Analysis by Deloitte in 2011, on behalf of the Energy Ministry 13 interviews with potential investors Some selected results from the answers: Difficult market situation at that time (crisis, supply bottlenecks) Ongoing Round III in UK Low flexibility in tender (sizing, timing, etc) High penalties for delays combined with a very strict time plan Very risky to come in 2 nd (Stand-by for 6 months) Foreign investors felt like underdogs 5

6 Practical aspects: Penalties and Stand-by Penalties in the Anholt project Opting-out of the contract after up to 5 months 100 mdkk/ 13 meur after 6-12 months 200 mdkk/ 26 meur after > 1 year 400 mdkk/ 52 meur Delayed installation (first turbine online) 1-3 months -1 øre/kwh (ca. 1%) 4-8 months -2 øre/kwh (ca. 2%) 9-12 months -3 øre/kwh (ca. 3%) not all turbines online on mdkk/ 52 meur Stand-by requirement in the Anholt tender If the first winner of the bid opts out within the first 6 months, the second winner has to take over the contract and undertake the project with in the same timeframe This would have required reserving components, vessels etc., and would have led to significant tied-up capital & additional risk to run into penalties due to time pressure 6

7 Practical aspects Some conclusions Being in good time to start the process is crucial Reducing risk is very much welcomed by potential bidders (complete EIA, detailed information, grid connection incl. potentially compensation) Penalties can help to ensure implementation of projects but too harsh limitations (steep penalties + strict time plans) can hamper competition A clear communication strategy, together with emphasis on dialogue and some flexibility in the process can improve competition 7

8 Thank you for your interest Any Questions Lena Kitzing PhD candidate Energy Systems Analysis Group DTU Management Engineering Denmark 8

9 References All facts mentioned in this presentation are publicly available. The respective reports can be downloaded from the following websites: