Denmark Invites Bids for Third Technology-neutral Tender

The Danish Energy Agency (DEA) has invited bids for a technology-neutral tender, where solar cell systems, wind turbines, wave energy plants and hydropower plants can compete for support. This is the third such tender launched by Denmark and will back around 428 MW of renewable energy projects using DKK 1.2 billion ($189.5 million) in state funds.

The deadline to submit proposals via the tender portal is October 22, 2021.

The upcoming technology-neutral tender will use a contract for difference (CfD) support model, and the bidding price is capped at DKK 0.25 ($0.038) per kWh, with support to be awarded for 20 years. The total potential support is DKK 1.2 billion (in 2020 prices) ($0.19 billion).

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Selected projects should be commissioned within two or four years after a contract with DEA has been signed, depending the technology. Developers can also choose to bid in the tender with part of a renewable energy system.

As different technologies compete for support in the technology-neutral offer, it is not known in advance how the support will be distributed between solar, wind, wave power and hydropower.

The support model was changed from being a supplement to the market price to being a contract for difference (CfD) following the Climate Agreement for energy and industry in June 2020. Under the CfD model, the state takes responsibility for a larger share of the long-term risk associated with the development of renewable energy.

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The last technology-neutral tender was concluded in December 2019, where solar cells and wind turbines competed for the lowest support price. It attracted 271 MW of onshore wind and solar projects, which resulted in the weighted average of the winning price supplements going as low as DKK 0.0154 per kWh. It was 32% lower than the year before and 16 times lower than the price supplement in the previously applicable support scheme (called the 25-øre), which expired in February 2018.

The current third tender will allow solar photovoltaic, onshore wind, open-door offshore wind, wave power and hydroelectric technologies to participate. It will be the only tender planned for 2021. The DEA has said that funds have been set aside for more technology-neutral tenders in 2022-2024.

According to the International Energy Agency (IEA), Denmark’s net-zero commitments and advancements with renewables make it a leader in energy transition. The country aims to cut GHG emissions by 70% from 1990 levels by 2030 and for renewables to cover at least half of the country’s total energy consumption by 2030.