In 2023, we celebrated the target of 4.5 GW of installed capacity of offshore wind energy. A major milestone that was achieved on time at less cost than anticipated. Clearly a success story. But there is a history preceding this. Together with Hans Rijntalder, we look back at 20 years of offshore wind.
The Netherlands has been developing offshore wind farms since the turn of the century. In 2007, the first wind farm was commissioned. But the work is not done yet: the aim is to have 21 GW by 2030. This is to be 50 GW by 2040, with 70 GW by 2050 as the provisional final goal. Despite history, we are at the beginning of many new and especially large offshore wind farms. Pondera has been involved in offshore wind development from the beginning. What lessons do we learn from the past?
Round 1 (2000-2008):
Egmond aan Zee wind farm and Amalia wind farm
Looking back at the creation of the first wind farms in the Netherlands, the government had a major role in the early preparation phase. Ecology, morphology and soil studies were commissioned by the government. When these studies were completed, a tender was launched for Egmond aan Zee in particular, where parties could bid. A choice was made based on quality criteria. Carefulness and learning through evaluation under the government’s direction was central to this round. This tightly directing role of the government caused resentment, as several market parties had reservations about the selection process that was incomprehensible to them.
Round 2 (2003-2013):
Over 70 permit applications, of which wind farm Luchterduinen and wind farm Gemini were eventually realised
In the second round, the government gave more control to the market. They were allowed to propose suitable locations, but had to draw up the Environmental Impact Report and apply for a permit themselves. This way, many parties managed to get a permit. For those who obtained a permit, another test followed: a tender to obtain a subsidy in which price was the main criterion. The latter caused problems during elaboration because parties only had to qualify on the basis of experience and the ability to actually realise such large projects. This resulted in a long lead time. Out of more than 70 licences applied for, two projects were realised in practice.
Round 3 (2015-present):
The current tender system
Under Dutch Minister Kamp’s guidance, the current tender system was created in close cooperation with the wind sector with the 2023 roadmap. In this system, the government has again taken on more direction. Quality is once again top priority. The realisation of these wind farms started in 2015. As early as 2020, the first wind farms were operational. In this way of working, tenders are awarded on the basis of quality and the government takes the risk at the very beginning, by not issuing a tender until the permits and grid connection are in place. This shortens the lead time considerably and also makes room for great innovations that contribute to accelerating the energy transition. Other countries often look at the Dutch way of working with envy. After all, in practice it ensures a transparent process in which low-cost and innovative wind farms are realised relatively quickly.
The predictability of the roadmap especially gives parties in the supply chain, such as contractors, enough time to order ships, for example. In other countries, tenders sometimes look more like GSM auctions where sites for wind farms are sold by bidding, without proper consideration of quality.
Breaking new ground
Looking forward, we see that we are currently at a switching point again. Again, there are several factors influencing the future. We are running up against the limits of the North Sea’s possibilities in the Netherlands. In daily practice, fishing, ecology, oil and gas extraction and wind are increasingly coming together. It is clear that the wind industry must cooperate with other North Sea users to enable ambitious growth. Furthermore, all our neighbouring countries are engaged in similarly ambitious programmes. The industry is far from ready for this and will have to grow tremendously. With Round 3 or the 2023 Roadmap completed, the government is reconsidering the way of tendering. Of course, it is good to look at this, but the investment climate has deteriorated considerably due to rising interest rates, among others. In neighbouring countries, we are already seeing investor withdrawals. When treading new paths, it is important to take a good look back at the past. A lot of learning expenses have already been made, and the resulting knowledge should be cherished.
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