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Second Belgian Offshore Wind Farm Area to be tendered

Stibbe - Second Belgian Offshore Wind Farm Area to be tendered

Second Belgian Offshore Wind Farm Area to be tendered

28.09.2018 BE law

At the Council of Ministers session on 31 August 2018, the principle memorandum Tendering offshore wind farms from 2020 onwards was approved. This memorandum sets out the actions and timing for the new area for offshore wind farm (1.7 GW). Very similar to what has happened in the Netherlands, the right to construct and operate new wind farms will be tendered in hope of not having to grant any subsidies at all.

1.1 Principle memorandum

Besides the current lack of availabilities of the Belgian nuclear power plants due to decay of concrete and maintenance works, all Belgian nuclear power plants are scheduled for decommissioning by 2025. In this context, the Belgian government announced its plan to create a second area for offshore wind farms in front of the coast of De Panne.

At the Council of Ministers session on 31 August 2018, the principle memorandum Tendering offshore wind farms from 2020 onwards was approved. This memorandum sets out 4 objectives:

  • To provide for additional offshore wind capacity of 1.7 GW (concrete fork to be determined);
  • To have a maximum of energy available on the transmission grid (in GWh) (concrete fork still to be determined);
  • To entail minimal costs for the energy consumer (concrete fork to be determined);
  • To construct offshore wind farms that can provide ancillary services (balancing, storage, etc.).

The new area will consist of either one zone of 1,750 MW (221 km²), which can deviate 20% upwards (on average 7.9 MW/km) or two zones of at least 700 MW (on average 7.9 MW/km²), which will be put on the market together.

1.2 Towards tendering with financial guarantees

Notably, the Belgian government decided to abandon the current system of offshore domain concessions and to shift towards tendering, similar to the ones that have been organized in the Netherlands.

Hence, the government itself will be conducting preliminary research on the optimal design in terms of wind, density, soil, etc. These research studies are scheduled to take place in 2020 and 2021, and they aim at finding a maximum energy yield. An environmental impact study will be carried out in 2018/2019. Once everything has been prepared, a tender will be organized whereby bidders on the zone(s) have a certain degree of freedom to offer the best economic project (in other words: price will not be the only criterion). Consequently, an implementation decision (with more details about the lot or lots) is issued in which the rights and obligations in the area of the lot(s) are set out, yet for which all (environmental) permits are automatically granted.

This new approach should result in a maximum of renewable energy capacity being installed at a minimal price. If the bids were to nonetheless lead to an LCOE higher than the expected electricity prices, subsidies can still be granted over a period of up to 15 years.

On the other hand, to minimize the risk of zero bids, following which the wind farm would not be constructed or operated, and thus to prevent Belgium from not meeting its EU 2030 climate targets, a renunciation clause will be added to each granting decision, and the selected bidder will be asked to issue a bank guarantee depending on the capacity of the wind farm and/or the decommissioning. A mandatory minimum operating time could then be imposed also.

The principle memorandum Tendering offshore wind farms from 2020 onwards also raises the idea of private participation interest in the offshore wind farms. It is currently still unclear how this would exactly work or who would be eligible to invest. 

Finally, it is provided that Elia, the Belgian TSO, will be responsible for the construction and operation of the transformer platform at sea and for the transport of the wind-farm-generated electricity to the onshore grid.

1.3 Indicative timing

Finally, it is worth noting that the Belgian government set out a specific timing for the development of these new offshore wind farms. If all deadlines can be met, the wind turbines will be up and turning by the time the nuclear power plants are decommissioned:

Date

Action

November - December 2018 CREG’s research study and findings on offshore support mechanisms
November - December 2018 Legal framework for 2nd offshore wind farm area
2019 Grid development plan 2020-2030 by TSO
2019 – 2021 Preliminary studies by Ministry of Economy / MUMM
First half of 2022 Implementing order with specific criteria per area
Second half of 2022 Tender process
2024 Construction begins

 

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