DEA issues Thor notice

In: Windfarms
The Danish Energy Agency has published a prior information notice for the forthcoming tendering of Thor offshore wind farm.

Thor is located 20 km off the West Coast of Jutland in North Sea and will be the first of three projects included in the 2018 Energy Agreement to be built over the next decade. First power is expected in Q2 2024 and full commissioning by 2027. The site covers an area of 440 km2, west of Nissum Fjord. It will have a capacity of minimum 800 MW and maximum 1,000 MW making it the largest offshore wind farm in Denmark.

The prior information notice is non-binding, and is primarily an opportunity for market players to make adequate preparations for the forthcoming tendering process. The notice will be followed by a binding contract notice, which officially will launch the tendering process and pre-qualification process. The publication of the contract notice together with the complete tender conditions is planned for Q3 2020.

The notice informs about a range of important details such as the size and nature of the project, contract value, geographical location, subsidy scheme, pre-qualification criteria, etc. These details play an important role for who will be able to bid for
Thor, and who wish to participate in bidding for Thor. In case some bidders wish to, or see it necessary to, form consortia or use certain suppliers, one of the main aims of the prior information notice is for them to start the building of such necessary consortia.

Prior to submission of final bids, a strategic environmental assessment (SEA) of the plan for Thor offshore wind farm will be conducted. Furthermore, supplementary surveys with focus on benthic flora and fauna, marine mammals, fish and fisheries, underwater noise, safety of navigation, radar and radio interference, marine archaeology, visibility analysis and cumulative impacts as well as a full EIA for the onshore project to be built by Energinet will be carried out. All results will be published as they become available in due time before submission of final bids

The concession winner will be responsible for undertaking the environmental impact assessment (EIA) of the concrete project offshore after the signing of the concession agreement. Establishment of necessary nearshore facilities from POC and grid connection forward to the transmission grid at Idomlund will be provided by the Danish TSO, Energinet. The onshore grid connection will be built to receive 1,000 MW in the POC and will be available to receive first power by Q1 2025.

As in previous Danish offshore wind farm tenders, the tendering model will be a negotiated procedure with pre-qualification. The concession owner of
Thor will receive subsidies in the form of a price premium for a 20-year period. The subsidies will be granted in accordance with a CfD-scheme designed for this tender. It is a two-way CfD with caps on both the Danish State’s payment to the concession owner and the concession owner’s payment to the Danish State, which will prevent that neither one carries the full risk of the electricity price developing fundamentally different from the forecast.

The estimated contract value for
Thor  is DKK 15.5 billion. The amount is an estimate of the total expected contract value, where the estimate is CAPEX-figures for a 900 MW wind farm. For a contract value adding a +/- 5 % safety margin the figures DKK 13.2 billion (800 MW) to DKK 17.7 billion (1,000 MW) have been estimated.

The concession owner will be obliged to pay for pre-investigations conducted by Energinet (app. DKK 300 million) and for any necessary mitigations actions in relation to Danish radar installations. Detailed information on contract conditions, the mentioned costs, etc. will be included in the tender material to be published later. The tender material will besides tender conditions and pre-qualification material enclose draft concession, draft licenses for preliminary investigations, establishing the offshore wind farm and for electricity production.

Wind energy currently covers approximately 8% of Denmark's total energy consumption. The country has over 1,200 MW of offshore wind power in operation with two projects currently under construction. This includes the
Horns Rev 3 and Kriegers Flak projects, both owned by Swedish energy company Vattenfall.

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