Factbox: Global offshore wind tenders and auctions in 2021 – Reuters

(Reuters) - Offshore wind power is a key renewable energy source for achieving ambitious climate targets, with many countries planning to award contracts to develop wind farms at sea this year.

FILE PHOTO: An Envision wind turbine at the Mozura wind farm in Ulcinj, Montenegro, June 18, 2020. REUTERS/Stevo Vasiljevic/File Photo

Governments have different options for structuring tenders, with the most common models being the award of seabed leases, contracts for difference, or centralised auctions.

Below is a list of planned tenders and explanation of the most common tender types.

The Nordic country is holding a centralised tender to develop the Thor offshore wind farm with up to 1 GW of capacity, with the result expected in December. Six bidders have been pre-qualified.

It is also launching a second centralised tender for the Hesseloe wind farm site of up to 1.2 GW this year.

The country will hold a centralised tender this year for a wind farm with roughly 1 GW capacity off Normandy in northern France.

It has also scheduled a further centralised tender for 0.25 GW of floating wind off the Brittany coast, also in northern France.

Germany is awarding just under 1 GW of capacity to be operational from 2026 in a centralised auction model tender ending on Sept. 1, covering acreage in both the Baltic and North Sea.

The country is expected to hold an auction for an as yet undetermined amount of offshore wind capacity under its Renewable Electricity Support Scheme (RESS), which offers successful participants a fixed price for their generation for around 15 years.

The country is set to award its first offshore wind licences totalling 1.5 GW this year. It is also expected to open a further round for another 1 GW.

The Hague is holding a centralised tender for the Hollandse Kust West area with 1.52 GW of capacity.

The country will award 5.9 GW of capacity with contracts for difference at a fixed strike price that is yet to be announced.

The UK awarded 8 GW of new seabed leases in English and Welsh waters in February. Later this year, it will also hold a CfD auction for up to 12 GW of capacity.

Scotland is holding a separate seabed leasing round for some 10 GW of capacity, which closes in July.

The state of New York awarded 2.5 GW of capacity in January, which was won by a joint venture of Equinor and BP.

Connecticut will hold an auction for 1 GW of capacity in the second half of the year, with results expected by year end or early 2022.

New Jersey is expected to award contracts for up to 2.4 GW of capacity in June.

Maryland is holding two auctions this year for a total of 0.8 GW.

Massachusetts will hold an auction for 1.6 GW of capacity in the second half of the year, with results expected by year end or early 2022.

Rhode Island is expected to award contracts for 0.6 GW by the end of June.

The Asian country is expected to commence an auctioning round open to pre-developed projects for a total of 1 GW capacity later this year, but awards may not be made until 2022.

In these auctions firms bid for the rights to develop a specific area offshore. Traditionally, governments award leases with a fixed option fee, payable annually until a project is approved and has taken a final investment decision, after which companies pay annual rent.

However, a British leasing round earlier this year applied a competitive process, achieving unexpectedly high prices for option fees.

Developers with seabed leases enter their projects into auctions for Contracts for Difference (CfD) once they have planning consent.

Participants bid projects with planning consent into the auction, based on a specific off-take price for their power. If wholesale prices are below the agreed price, they receive the difference, but in return need to relinquish the profits if selling their production above the agreed strike price in the wholesale market.

In this auction model, countries offer pre-determined sites to any bidder with no need to enter a specific, pre-developed project.

Reporting by Nora Buli, Nicola Groom, Yuka Obayashi, Susanna Twidale; Editing by Kirsten Donovan

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Factbox: Global offshore wind tenders and auctions in 2021 - Reuters