Legal developments in offshore wind energy in the Netherlands; part 6
Second tender Borssele III & IV
With the results of the first tender only being announced last week, the Dutch government has already announced the opening of the next round later this year. Bids for the sites Borssele III and IV can be submitted as from 16 September 2016 until 29 September 2016, 17.00 CET.
Below we will provide a brief overview of the current status of the preparation for this second tender and important changes that will be made in the tender procedure in comparison to the first tender.
Status Site Decisions Borssele III, IV & V
RVO announced in May 2016 that there were no appeals against the Borssele Site Decisions III, IV and V and therefore the Site Decisions had become are irrevocable by 21 May 2016. Due to the fact that these Site Decisions contained incorrect geographical coordinates, they however have to be amended. From 1 July 2016 to 11 August 2016 parties can submit their views on the amendments.
According to the Netherlands Enterprise Agency (RVO), the amendment of the site decisions prevents the opening of the tender on an earlier date. As a consequence, the tender will be open for a relatively short period.
Tender Regulation 2016
The Tender Regulation 2016 was published in the Government Gazette on 8 July 2016. This Regulation is to a large extent identical to the Tender Regulation 2015. Deviations regard (i) specific characteristics of the sites Borssele III and IV, (ii) restriction of the number of applications submitted by or on behalf of 1 party and (iii) clarifications.
Specifics to the sites Borssele III and IV
Pursuant to the Tender Regulation 2016 for site III the nominal capacity of the installation shall be at least 331 MW and for site IV 351 MW, in both cases reduced by the capacity of the turbine with the lowest capacity. The maximum capacity for site III shall be 360 MW and for site IV 380 MW. The different capacity for these sites is due to the fact that site V (i.e. the 20 MW innovation site, adjacent to site III) shall be connected to the same TenneT platform.
The base electricity price – which is now determined on the basis of a new calculation method - amounts to EUR 0.03 per kWh; the maximum tender amount (i.e. the required subsidy per kWh) amounts to EUR 0.11975 per kWh and the maximum subsidy for site III is EUR 2,400,000,000 and for site IV EUR 2,600,000,000. It should be noted that the maximum tender amount is identical to the amount that was mentioned in the letter of the Minister of Economic Affairs to the House of Representatives dated 19 May 2015. It has not been changed to account for the winning bid of 7.27 cents per kWh in the first tender.
The ranking of eligible applications has not changed. Given the fact that in this tender the capacity of the two sites differs, the Tender Regulation 2016 mentions that in case several combined bids (in the Tender Regulation 2015 the term 'bundled bids' was used) rank higher than bids for individual sites, the ranking of such combined bids will be determined on the basis of the weighted average tender amount per kWh of the combined bids, with site III accounting for 33/68 and site IV accounting for 35/68.
Equal to the Tender Regulation 2015, the Tender Regulation 2016 requires the applicant's equity capital to equal at least 10% of the total investment of the wind park and allows the applicant to rely on its parent company for the fulfilment of this requirement or, in case of a joint venture, on its joint venture partners. New provisions regarding this reliance have been introduced in the Tender Regulation 2016, partly for clarification purposes and partly in order to restrict this reliance.
The explanatory notes to the Tender Regulation 2016 confirm that an applicant is allowed to rely on the equity capital of its parent company or, as the case may be, its consortium partners and their parent companies, to meet the 10% requirement. In addition, the explanatory notes clarify that when an applicant is a company under incorporation (e.g. B.V. i.o.), it can rely on both the equity of its parent company and of its incorporator and in case of a limited partnership, the limited partnership may rely on the equity of the general partner and the general partner's parent company (or parent companies). A new element is that reliance of a parent company will not be simply assumed, but will only apply if the written consent of the parent company that is relied on has been obtained. To that effect a statement of such parent company needs to be submitted together with the bid. Another new element is that the equity of a parent company or consortium partner may not be relied on by more than two applicants. In case this restriction is not complied with, the equity of such parent company or consortium partner will not be accounted for in any of the applications. This new restriction aims to avoid that parties, for tactical reasons, submit a large number of applications through different bidding entities.
No amendments have been made to the implementation agreement and the draft bank guarantee.
- In case of a successful combined bid a subsidy decision shall be awarded to each site;
- Subsidy shall be denied in case this would result in the award of subsidy to more than one producer per site;
- If an applicant submits more than one application per site (or more than one combined application) all such applications shall be denied (e.g. if an applicant submits two applications for site III, one application for site IV and one combined application, the two applications regarding site III shall be denied, but the applications for site IV and the combined application shall be eligible);
- The P-50 value of the annual net electricity production of the wind park needs to include the availability of the park, the wake effect, electricity losses, own electricity consumption, environmental factors, turbine efficiency and curtailment losses;
- The calculation of the P-50 value can only include the wake effect of wind parks that are already in operation prior to 1 July 2016.
During the workshop organized by RVO on 11 July 2016, RVO announced that it has made a number of relatively small changes to the tender application forms. Drafts of the new tender application forms will be published on its website shortly.
Preparation for further tenders: expansion of offshore wind area Hollandse Kust
The Minister of Economic Affairs has announced the amendment of the National Water Plan 2016 -2021, expanding the wind sites Hollandse Kust North and South by addition of the area between the 10 and 12 mile zone, thereby aiming to increase the cost efficiency of the sites. From 19 August 2016 to 29 September 2016 parties can submit their views on this amendment. The final decision will be taken at the end of 2016.