Search

Click on ‘Fast Search’ for highlighting. Click on ‘Advanced’ to get a list of chapters containing your search results.

Change Text Size      
Introduction
In 1991 the first offshore wind project was installed off the coast of Denmark. Over the past 25 years offshore wind has become an integral part of the European energy mix. More than 3 GW of new offshore wind capacity was commissioned in Europe during 2015. This has resulted in a cumulative installed capacity exceeding 11 GW at the end of 2015, most of which is located in the North Sea, making Northern Europe a frontrunner in offshore wind.

Recent tender awards in the Netherlands and Denmark show that offshore wind energy is rapidly improving its competitive position vis-a-vis conventional generation. Important structural cost reductions have been achieved and the industry’s cost reduction objectives for 2020 have been achieved well ahead of schedule.

Looking ahead, we see that many countries aim to increase their offshore wind capacity. The targets for the main offshore wind markets in Northern Europe – Belgium, Denmark, France, Germany, the Netherlands and the UK – add up to 20 GW in 2020. The North Sea is expected to remain the main region for offshore deployment in the coming years, with significant developments also foreseen in the Baltic Sea and the Irish Sea.

While there are similarities between some of these markets, there are also important differences, e.g. in terms of location-specific factors, such as distance from shore and water depth, and applicable legislation in relation to spatial planning, permit, subsidy mechanisms and grid connection. The CMS Guide to offshore wind in Northern Europe provides insight into the regulatory framework for offshore wind in Belgium, Denmark, France, Germany, the Netherlands and the UK. It is designed to assist in understanding the offshore wind sector across Northern Europe and highlights similarities as well as differences across the different jurisdictions.

The publication of this guide will take place in six phases. Each month a chapter on a certain jurisdiction will be made available on this webpage, starting with the Netherlands and followed by Denmark. Throughout the first half of 2017 France, Belgium, Germany and the United Kingdom will be published.

CMS has been, and continues to be, deeply involved in the development of offshore wind energy. We have worked on over 50 offshore wind projects in several jurisdictions, and have advised many leading companies in the sector on all aspects of offshore wind farms.

This guide is published in association with Bech-Bruun, Denmark’s largest law firm with a strong and highly specialized practice within offshore wind. We are delighted that Bech-Bruun has agreed to contribute the chapter on the Danish regulatory framework.

If you would like to receive more detailed information about the legal regime in a particular jurisdiction, please contact one of the authors of this guide, who will be happy to provide further information.
Belgium
Belgium chapter: June 2017
1. Introduction
Despite a relative limited marine territory, Belgium has over the last decade been one of the most active European countries in the field of offshore wind projects. Some 238 km², i.e. 7 % of the Belgian North Sea are devoted to the production of renewable energy under the Marine Spatial Plan of March 2014. Up to 433 turbines could be installed and operated by 2020, with a total capacity up to 2,280 MW (i.e. about 10 % of the Belgian installed generation capacity). To date, three of the nine licensed wind farms are already operational, i.e. C-Power, Belwind and Northwind. Six other projects were licensed in 2014 – 2015 and should be operational by 2020 (Norther, Rentel, Mermaid, Northwester 2, Nobelwind, Seastar).
Under the Belgian federal system, each of the three regions (Flanders, Wallonia and Brussels) has jurisdiction on its territory in various fields, including energy policy, with the exception of nuclear plants and transmission network regulation (> 70 kV).
While the jurisdiction of the regions is territorial, the Federal State remains in charge of offshore activities. This explains why the legal framework for the development of offshore wind parks in Belgium is settled under Articles 6 and 7 of the Federal Act of 12 April 1999 organizing the Electricity Market (the Electricity Act).
All tender procedures are currently closed, and the Federal Government has not planned to devote additional zones to offshore wind so far. Nevertheless, due to low prices awarded to offshore wind farms in the Netherlands (Borssele) and in Germany, the Secretary of State in charge of offshore wind projects recently considered the recall of the concessions granted to Northwester II, Mermaid and Seastar.
2. Subsidy
2.1 General
Renewable energy projects in Belgium are generally supported by the granting of Green Certificates (GCs), which support the production of a certain amount of electricity from a renewable energy source. A Green Certificate is issued by market regulators (in the case of offshore wind farms, the federal market regulator CREG) for each 1,000 kWh net electricity produced from renewable resources. Producers may either sell these Green Certificates to electricity suppliers, or offer them for sale to Elia, the Belgian transmission system operator (TSO), in which case Elia is obliged to purchase such Green Certificates at a guaranteed (minimum) price determined by the Federal Government.
2.2 Offshore wind subsidy
The Electricity Act initially enabled the Federal Government to create a specific support scheme for offshore wind projects, based on two instruments:

  • a Green Certificates scheme with a purchase obligation for the TSO for a period of 20 years (19 years for projects with financial close after 1 May 2016) at a minimum fixed price;
  • a levy on transmission tariffs to be charged by the TSO to the distribution system operators (DSO’s) and holders of Access Contracts (non-technical take-off and injection agreement), ensuring the pass-through of the costs of the Green Certificates scheme to the end consumer.1

In relation to aforementioned minimum fixed GC price a distinction is made between offshore wind farms that reached financial close before 1 May 2014 and offshore wind farms that reached financial close thereafter. Offshore wind farms with financial close prior to 1 May 2014 can sell their Green Certificates to the TSO at a fixed minimum price of EUR 107 per MWh for the electricity that is generated from the first 216 MW of the installed capacity, and EUR 90 MWh for the electricity generated from any additional installed capacity. Offshore wind farms that reached financial close after 1 May 2014 can however sell their Green Certificates to the TSO at a fixed minimum price based on a Levelised Cost of Energy (LCOE), that aims to reflect the total annual costs, calculated over a period of 20 years, based on the generally applicable technological reference framework required to generate 1 MWh (CAPEX, OPEX, 12 % ROI). The LCOE is fixed by the Minister of Energy, based on a proposition by the Federal Regulator following discussion with the holder of the domain concession. It shall take into account the need to avoid over-subsidisation and the interest of the end consumer (e.g. for offshore wind farms RENTEL and NORTHER, respectively EUR 129.80 per MWh and EUR 124 per MWh). The minimum GC-price payable by the TSO to such offshore wind farms is the difference between the LCOE and:

  • the reference electricity market price (with application of a correction factor), which is determined annually by the Federal Regulator based on the nominations of the ICE Endex Power Baseload Futures;
  • the value of generated Guarantees of Origin;
  • a (monthly settled) correction factor for grid losses.

In 2005, additional supporting measures were added for new projects:

  • the financing by the TSO of up to one-third of the costs of the transmission cable to the onshore grid (purchase, delivery, installation, connection), with a maximum of EUR 25 million for projects of 216 MW and more (this amount in reduced proportionally for smaller projects);
  • preferential balancing tariffs (plus or minus 10% of the reference market price) for variations of production up to 30% of the nominated production (positive or negative);
  • an investment guarantee in case of withdrawal of one of the authorisations, permits or permissions, or cessation of the project (in the absence of any fault, breach, negligence, etc. of the project developer).

In order to finance the burden of the GC scheme, an offshore surcharge, which applies to all end consumers, was introduced in 2012, with the parallel constitution of budgetary funds (Art. 7, § 1ter of the Electricity Act), annually fed by two-thirds through the nuclear levy, in order to reduce the impact of the offshore supporting measures on end consumers.
In addition, the financial support for the transmission cable was amended in 20102, 2013, 2014 and 2016, taking into account the plans to develop a Belgian offshore grid (see section 5 below) that will reduce transmission costs for future projects.
3. Spatial planning
3.1 Designated areas for offshore wind
The development of various activities in the Belgian marine areas - especially the development of offshore wind farms after the entry into force of the Electricity Law - led the Federal Parliament to adopt, by Act of 20 July 2012, a legal framework for the organisation of the planning of marine areas, and the subsequent issuance of Royal Decrees relating to:

  • the modification of special areas of conservation (Directive 92/43/EEC on the conservation of natural habitats and of wild fauna and flora) and special protection areas (Directive 2009/147/EC on the conservation of wild birds) (Royal Decree of 16 October 2012)
  • the creation of a dedicated advisory commission and the procedure for the adoption of the Marine Areas Development Plan (Royal Decree of 13 November 2012)
  • the Marine Areas Development Plan (Royal Decree of 20 March 2014).

The Marine Areas Development Plan designates the zones dedicated for the development and operation of offshore wind farms2, in total covering up to 240 km2 (equal to 7% of the Belgian North Sea), of which approximatively 170 km² are currently already occupied by existing projects. This means that, taking security zones into account, the entire area designated by the development plan for offshore wind farms has actually already been granted to existing projects. Further development of offshore wind would require a revised or new development plan. Such a new plan or amendment is not already (officially) being considered.
Map of the offshore wind projects in the Belgian Marine Area
4. Permits
Key permits and licences for the development of offshore wind farms are:

  • domain concession
  • marine protection permit
  • cable permits

Offshore wind parks must be authorized – even in demonstration phase if necessary by the Federal Minister of Energy – within three years after the latest concession, permit or licence has been granted, and no significant part of the park may be shut down for more than one year, except in the event of lawful, thorough technical reasons or force majeure.
Below each of the aforementioned permits and licences is addressed.
4.1 Domain concession
Pursuant to article 6 of the Federal Electricity Act of 21 April 1999, offshore projects require a domain concession from the Federal Minister of Energy for constructing and operating a power plant using water, currents or wind energy within the designated marine areas. The concession secures the title to use such area (the occupation permission) for the development and operation of the offshore wind farm (however excluding the offshore cables).
Pursuant to the aforementioned Act domain concessions to build and operate power plants are granted for a (renewable) period of 30 years. A domain concession may be granted prior to the environmental permit, but will not come into effect until the environmental permit is in place.
The procedure and the conditions for the application of the concession and for the award of the concession are elaborated on in the Royal Decree that was adopted by the Federal Government on 20 December 2000. Pursuant to this decree a domain concession will be granted taking several criteria into account, including:

  • the conformity of the installation with the technical regulations regarding the operation of, and access to, the transmission grid;
  • the impact of the installation on previously authorised activities;
  • the quality of the project both technically and economically (considering Best Available Techniques);
  • the quality of the submitted O&M plan and, where the installation is permanent, the proposal of technical and financial provisions for the treatment and removal of the installation;
  • the location of the project.

The table below provides an overview of domain concessions for offshore wind farms that have been granted to date.
Date of domain concession Project Area Capacity Start of operation
27 June 2003 C-POWER Thornton Bank 326 MW July 2013
15 May 2006 NORTHWIND (formerly SA ELDEPASCO) Lodewijk Bank 216 MW May 2014
5 June 2007 BELWIND, partially transferred to SA NOBELWIND by Royal Decree of 11 September 2015 Bligh Bank 171 MW

+ 165 MW (NOBELWIND – under development)
December 2010
4 June 2009 RENTEL between Thornton Bank and Lodewijk Bank 309 MW under development
5 October 2009 NORTHER Thornton Bank 258-470 MW under development
1 June 2012 SEASTAR between Lodewijk Bank and Bligh Bank 246 MW under development
20 July 2012 MERMAID, partially transferred to SA NORTHWESTER II by Royal Decree of 12 May 2015 North of the Bligh Bank 246/266 MW under development

4.2 Marine protection permit
In addition, offshore wind farms require an environmental permit, referred to as the “marine protection permit”, that confers on the permit holder a right to construct the installation and a licence to operate the installation. The legal framework in relation to the application procedure for this permit is set out in:

  • the Law on the Protection of the Marine Environment of 20 January 1999
  • the Royal Decree of 7 September 2003 concerning the procedure for licensing and authorising the activity
  • the Royal Decree of 9 September 2003 concerning rules on the assessment of the environmental impact.

This procedure can be summarised as follows:

  • the applicant submits an environmental impact study (EIS) to the Scientific Service Management Unit of the North Sea Mathematical Models (MUMM) of the Operational Directorate Natural Environment
  • MUMM then produces an environmental impact assessment (EIA). As a part of its assessment MUMM can also carry out other studies in order to give an opinion on the acceptability of the project concerning the marine environment
  • a public inquiry, which - depending on the impact - may be cross-border, will be held within 45 days. Based on the EIA and the public inquiry, MUMM addresses recommendations (i.e. acceptability to the marine environment and related conditions) to the Federal Minister for the Marine Environment
  • the Minister takes a decision on the granting of the environmental permit.

Depending on the complexities of the case, it can take about six to eight months from the date of submission of the permit application to the final decision of the Federal Minister of Energy.
The operating licence (authorisation for construction and operation) is granted for a period of 20 years. The construction authorisation is granted for a period of five years, and can be extended once for an additional period of five years.
The marine protection permit will only enter into force after all other required permits and licences have been obtained (however with a maximum of four years after the date of issuance), and will expire if any of such permits or licences are refused.
4.3 Submarine cable permit
The third key permit that is required for an offshore wind farm is a permit to lay submarine cables in the North Sea (territorial waters and the Belgian EEZ). The submarine cable permit is issued by the Federal Minister of Energy under the Federal Act of 13 June 1969 (Article 4). The permit application procedure is set out in the Royal Decree of 12 March 2002. As a general provision, this decree stipulates that the cable must be laid as close to existing installations as possible and in such a way as to minimise the impact on the sea floor. The issue criteria (listed in Article 5 of the aforementioned decree) include, inter alia, an impact study of the cable applied for on the existing grid, and proof of the applicant’s financial and technical capacity.
Applications must be submitted to the Federal Public Service for Economic Affairs together with information on the financial and technical capacity of the applicant and the evidence that the criteria listed in Article 5 are met. Applications are referred for advice to various authorities listed in another decree (the Royal Decree of 2 August 2000) and the EIS is realized by the MUMM. The entire application process may take up to 155 days, resulting in the Minister giving his substantiated decision, which shall be published in the Official Journal.
5. Grid connection
Under the current regime, each offshore wind farm operator is required to conclude an individual connection contract with the TSO, which will include a capacity reservation on the Belgian transmission grid. Concession holders may however - for cost savings or administrative or environmental purposes – make use of a shared connection cable or grid.
It was envisaged that future offshore wind farms (i.e. wind farms with an offshore domain concession granted after 1 July 2007) shall in principle connect to the proposed new Belgian Offshore Grid (BOG).3
In its development plan for the transmission of electricity 2010-2020, TSO Elia considered the possible configurations for the development of the BOG, but did so without strictly engaging itself in this project. Nevertheless, the CREG is of the opinion that it follows from the Third Electricity Directive that Elia shall become the owner of the BOG.
In April 2017, Elia announced an estimated EUR 400 million investment in a modular offshore grid (“MOG”) in the North Sea, that will connect the next four offshore wind farms (Rentel, Northwester 2, Mermaid and Seastar) to the Belgian onshore grid and will also provide opportunities for future development and interconnections with neighbouring countries. The MOG will consist of an offshore platform to which the new wind farms will connect and which will be linked to the shore through three submarines cables. Start of operation of the MOG is planned for the third quarter of 2019.
The legal framework for the MOG is currently being discussed in the Federal Parliament, and should be adopted in 2017. This legal framework will address the obligation for wind farms to connect to the MOG and penalties in case of connection interruptions.
In order to connect the existing offshore wind farms (having an aggregate capacity of approximately 900 MW) to the onshore grid, Elia has in recent years reinforced its onshore grid in the coastal areas. To allow for a further development of offshore wind farms and as a prerequisite for the MOG, it is currently upgrading the electricity grid between Zomergem and Zeebrugge (Stevin Project) and working on the construction of a new high-voltage substation in Zomergem (Horta Project).
6. Relevant links
7. References
  • Reductions apply to large consumers who entered into Environmental Agreements with the authorities that aim to achieve specific environmental targets, such as waste production, emissions, etc.

  • Those zones were previously delimited by a Royal Decree of 17 May December 2000, modified by Royal Decree of 3 February 2011.

  • A derogation from the obligation to connect to the BOG may be granted by Royal Decree.

Denmark
Danish chapter: January 2017
1. Introduction
Since the oil crisis in the early 1970s the Danish energy system has become increasingly more reliant on renewable energy sources. From 2008 to 2014, the total generation from central power stations (coal and gas) and local combined heat and power has declined from 80% to 55%. In the same period, the proportion of wind power in total electricity generation has increased from 20% to around 43%. In the EU in 2014, Denmark had by far the highest share of wind power in its gross final electricity consumption.1

For the electricity sector, the intermediate objective is to supply approx. 50% of the electricity consumption by wind power by the year 2020.2 This target is defined in a broad political agreement of 22 March 2012 on Danish energy policy for the years 2012-2020 (“Energy Agreement 2012”).3

Denmark is a pioneer of the development of offshore wind power, and currently has the world’s longest experience with tenders for offshore wind power. The world's first offshore wind farm was established in 1991 off the coast of Vindeby in Danish waters. Today, 13 offshore wind farms have been established in Denmark, see table below.

Offshore wind farm Established Turbines Capacity
Vindeby 1991 11 4.95 MW
Tunø Knob 1995 10 5 MW
Middelgrunden 2000 20 40 MW
Horns Rev I 2002 80 160 MW
Rønland 2003 8 17.2 MW
Nysted 2003 72 165.6 MW
Samsø 2003 10 23 MW
Frederikshavn 2003 3 7.6 MW
Horns Rev II 2009 91 209 MW
Avedøre Holme 2009/10 3 10.8 MW
Sprogø 2009 7 21 MW
Rødsand II 2010 90 207 MW
Anholt 2013 111 399.6 MW
Source: Danish Energy Agency, www.ens.dk.

Thus, the total Danish capacity of offshore wind farms is 1,271 MW. Ongoing offshore wind farm projects are further expected to add more than 1,000 MW by 2021.

Currently, there are six ongoing offshore wind farm projects: Nissum Bredning experimental wind farm (28 MW); Jammerland Bugt (120–240 MW); Omø Syd (200–320 MW); Horns Rev 3 (400 MW); Kriegers Flak (600 MW); and two near shore wind farms Vesterhav Syd and Vesterhav Nord, respectively (350 MW).

As there is currently no prospect of new near shore tenders coming up, this chapter will not elaborate further on near shore wind farms.
2. Permit
2.1. General
Under the Danish RE Act5 the Danish State may grant rights of use and access to private parties in order to exploit energy from the wind in Danish territorial waters and in the exclusive economic zone (EEZ). The construction and operation of offshore wind farms is mainly regulated within the framework of the RE Act.

There are two different procedures for obtaining permits for construction and operation of offshore wind farms in Denmark: tenders announced by the State, and the so-called open door procedure.

Under the tender procedure, the Danish State invites tenders for an offshore wind farm in a designated location and with a specified capacity, as a concession. Under the open door procedure, a licence application is submitted on the project developer’s own initiative, who also determines the location and capacity of the offshore wind farm.

The permitting process is carried out through a one-stop-shop approach, in which the Danish Energy Agency (DEA) grants the key licences, and coordinates with other relevant public authorities.6

Under both the tender procedure and the open door procedure, the permitting process consists of the following four key licences for construction and operation of offshore wind farms:
  • licence to conduct pre-investigations
  • licence to construct the wind farm
  • licence to exploit the wind power from the wind farm
  • authorisation to produce electricity.

The pre-investigation, construction, and electricity production licences are governed by the RE Act. The electricity production authorisation is governed by the Danish Electricity Supply Act.7 The licences are issued as the project proceeds.
Pre-investigation licence

The pre-investigation licence entitles the licensee to carry out investigations related to the construction of the offshore wind farm within the limits of the licence. The requirements for obtaining a pre-investigation licence differ for the tender procedure and the open door-procedure and are elaborated below in sections 2.3 and 2.4. The licensee has no explicit obligation to carry out the pre-investigations, but the licence will lapse if pre-investigations are not carried out within a certain time limit set out in the licence.

The pre-investigation licence will typically be valid for one year after which an environmental impact assessment (EIA) report is to be submitted to the DEA for approval. Based on the EIA report, the DEA will decide whether a full impact assessment is required. If a project individually, or in combination with other plans or projects, has potential impact on designated international nature reserves (habitat sites, special bird protection sites and Ramsar areas), a full impact assessment is required.8 The impact assessment can be included in the EIA report provided that a clear distinction is made between the report and the impact assessment.9 The DEA will, in its capacity as EIA authority for the offshore installations, submit the EIA report for consultation with other authorities before deciding on approval of the report.

Construction licence

The construction licence grants the licensee the right to construct a wind farm at a certain location, and will include terms concerning the design and appearance of the foundations, towers, and wind turbines, as well as requirements for the overall construction process. This licence is issued to applicants who are entitled to make use of a pre-investigation licence, and are deemed to have the necessary technical and financial capacity to establish the wind farm. The construction licence will expire upon issue of the electricity production licence.

Electricity production licence

The electricity production licence grants the licensee the right to exploit the wind and produce electricity from the wind. The electricity production licence is issued if the applicant documents compliance with the terms and conditions of the construction licence. The licensee must at all times have the required technical and economic capacity to operate the wind farm. The licence is generally granted for 25 years from the date of grid connection (i.e. the time of delivery of the first kWh to the collective electricity supply grid) with the possibility of applying for an extension beyond this 25-year period.

Electricity production authorisation

An electricity production authorisation is required for operating power plants with a capacity exceeding 25 MW. The authorisation is issued if the applicant documents having the necessary technical and financial capacity to operate large power plants. Pursuant to the Electricity Supply Act further conditions may be imposed by the DEA.

Generally, any direct or indirect transfer of the rights and obligations under the above-mentioned licences as well as the electricity production authorisation requires the consent of the DEA, which may be withheld by the DEA for objective reasons.

Objections against the award of the licences or the authorisation may be filed to the Danish Energy Board of Appeal within four weeks from the issuance of the relevant licences/authorisation. Unless decided otherwise by the Energy Board of Appeal, appeals do not have suspensory effect.
2.3. Open door procedure
The open door procedure is an administrative process following which the DEA issues the key licences, provided that the applicant fulfills the legal requirements. There is no element of competition under this procedure.

The DEA enjoys discretionary power in relation to pre-investigation licence applications under the open door procedure, taking into consideration the applicant’s financial and technical capacity and the site’s relevance for exploitation of energy. In its assessment of the relevance of the site, the DEA can include a broad set of criteria, including general planning considerations and rules on the minimum distance from the coast. The pre-investigation licence will not be granted if it is clear that the construction of the prospective wind farm is ruled out due to environmental reasons (e.g. due to the impact on protected areas), safety reasons, maritime traffic, fisheries etc.

The DEA has indicated that it aims to apply stricter conditions for the progress of projects under the open door procedure.10 This entails that the DEA will lay down milestones for each step in the application process, with specific deadlines for the processing of pre-investigation licence applications by the DEA and until the construction licence is applied for. For instance, applicants must submit to the DEA any supplementary information requested by the DEA during the processing of pre-investigation licence applications within four weeks from the request, and applicants must submit an application for a construction licence within six months after the DEA’s approval of the pre-investigation report. These stricter progress conditions will apply to existing as well as new pre-investigation licence applications. The DEA may extend the deadlines if there are special circumstances relating to the application.

Pursuant to the RE Act owners of offshore wind farms located less than 16 kilometers from the coast line are obliged to offer 20% of the ownership shares in the wind farms to local citizens with residence within a distance of 4.5 km from the wind farm’s location, or with residence in a municipality having coastlines within 16 km from the location of the wind farm (referred to as the “option to purchase” scheme). From 1 January 2017, the option to purchase scheme will also apply to owners of holiday homes which generally meet the same conditions as local residents. The purchase options must be offered after issuance of the construction licence, but prior to the grid connection of the wind farm.

In addition, pursuant to the so-called depreciation scheme under the RE Act, owners of wind farms are obliged to compensate depreciation on residential property caused by wind farms, provided that such depreciation exceeds 1% of the property value. In order to inform eligible local citizens about this scheme, the project developer and Danish transmission system operator (TSO) Energinet.dk are required to organise a public meeting. Claims under the scheme will be assessed by Energinet.dk and must be submitted within eight weeks of the public meeting.

As from 1 January 2017 the RE Act entitles local municipalities to object to the issuance of a pre-investigation licence for a wind farm that will be located within 8 km of the coastline. If a municipality objects pursuant to these new rules, the matter will be put before the Energy, Utilities and Climate Committee of the Danish Parliament for review, before the Minister for Energy, Utilities and Climate makes the final decision whether to issue the licence. An objection from a municipality will therefore not automatically result in the application being rejected if the minister, based on certain considerations specified in the RE Act such as security of supply, finds that there is a basis for issuing the pre-investigation licence.
2.4. Tender procedure
Tenders for large-scale offshore wind farms find their basis in the Danish Parliament's political agreements. The tenders are announced in the Supplement to the Official Journal of the European Union.11 Tender invitations are issued by the DEA on behalf of the Danish State. It is also the DEA that lays down the tender specifications after having presented them to the Energy, Utilities and Climate Committee of the Danish Parliament.

In order to be considered for pre-qualification in the tenders, applicants must meet the minimum requirements regarding economic, financial, and technical capacity, as stated in the specific contact notice published in the Supplement to the Official Journal of the European Union. The assessment of the applicant's economic and financial capacity considers, inter alia, the applicant’s overall turnover, total equity or credit rating, its full annual report and audited accounts. In order to fulfil the technical capacity requirement, the applicant must – itself or through, for example, declarations of support – possess experience with project development and management of the construction of offshore wind farms.

Before bid submission, pre-investigations are carried out by Energinet.dk, by an order issued by the Minister for Energy, Utilities and Climate. Thus, a fully consented EIA is in place before the final bids are submitted. This aims is to allow tenderers to submit qualified and competitive offers. The costs incurred by Energinet.dk for pre-investigations and preparation of the EIA are borne by the winner of the tender.

The winner of the tender is awarded a concession to construct and operate the tendered offshore wind farm. The concession is awarded on the basis of the award criterion “the lowest price”, and reflects the minimum need for subsidies (see section 3 below). Unlike the open door procedure, where no concession agreement is concluded, the tender procedure is concluded by the DEA and the winning tenderer entering into a concession agreement. In previous completed tenders, the concession agreements contained detailed terms and conditions in relation to, inter alia, the key licences, the subsidy regime, grid connection, defective performance, decommissioning, transfer of the concession, liability, and compensation for delayed grid connection.

Under the RE Act, the concessionaire may be subject to a penalty for defective performance if the concessionaire, for whatever reason, fails to construct and connect the offshore wind farm in accordance with the terms of the concession agreement.

In the concession agreement and/or the key licences, the DEA usually requires that the concessionaire provides certain guarantees, including a guarantee for payment of a penalty for defective performance and a guarantee for dismantling and decommissioning the wind farm pursuant to the terms and conditions of the construction licence and the electricity production authorisation.

Due to the nature of the tender procedure, the concession award may be subject to objections with the Danish Complaints Board for Public Procurement. Objections must be lodged within a period of 45 calendar days, starting from the day after the publication of the award notice in the Supplement to the Official Journal of the European Union.

After entering into the concession agreement, the concessionaire is granted a pre-investigation licence and a construction licence. The concessionaire will have to apply for an electricity production licence and an electricity production authorisation upon commencement of construction, and do so no later than two months before the first wind turbine supplies the first kWh to the collective electricity supply grid.
2.5. Certification of wind turbines
Offshore wind farms are subject to technical certification of the wind turbines pursuant to the Danish Executive Order no. 73 of 25 January 2013 on a technical certification scheme for wind turbines. Pursuant to this certification scheme, the turbine producer is responsible for obtaining a type or prototype turbine certification from a certifying company accredited under the Executive Order. The period of validity of such certification varies according to the type of certification.

In addition, turbines with a swept area exceeding 200 m2 must, upon installation, be certified as a project in accordance with European standard DS/EN 61400-22, including specified DS/EN, IEC and ISO standards. Project certification must be applied for by the project owner and is issued by a DEA-approved certifying company in relation to a specified location and design. Project certification is valid for the entire design lifetime of the turbines.13
3. Subsidy
3.1. General
Historically, subsidies granted by the Danish State have been essential to the development of wind power in Denmark. Danish support to renewable energy (RE support) is currently financed through the so-called PSO (Public Service Obligation) tariff. This includes financing of subsidies for electricity produced at offshore wind farms, whether tendered or under the open door procedure.

However, in 2014, the European Commission criticised the PSO tariff for imposing a burden on imported electricity and took the position that the PSO tariff is in violation of the Treaty of the Functioning of the European Union. Consequently, Denmark committed to finding alternative financing of the Danish RE support by 1 January 2017. In November 2016, the government and a majority of the parties of the Danish Parliament reached an agreement hereon. Pursuant to the political agreement, the PSO tariff will be gradually phased out during the years 2017 – 2022. The RE Support will instead be financed directly through the national budget.

The amount of subsidies granted for electricity produced at offshore wind farms depends on whether the offshore wind farm is established following the open door procedure or a tender procedure14.
3.2. Subsidies for open-door offshore wind farms
Offshore wind farms established pursuant to the open door procedure are entitled to subsidies under the subsidy scheme that applies to onshore wind farms.

The subsidy amount will depend on the date of grid connection. Wind farms that are connected to the grid after 1 January 2014 and produce electricity that is supplied to the Danish collective supply grid receive a premium of maximum DKK 0.25 per kWh in addition to the market price for electricity. Pursuant to this subsidy scheme, the premium together with the market price for electricity (the total settling price) may not exceed DKK 0.58 per kWh. Consequently, if the market price exceeds DKK 0.33 per kWh, the premium is reduced accordingly.

The premium is granted for a total amount of production (e.g. in MWh) determined for each project based on a combination of the wind farm’s installed effect and its swept area.15

It should be noted that the European Commission’s state aid approval of this subsidy scheme expires on 21 February 2018.16 In order to be entitled to the premium under this subsidy scheme, wind turbines must therefore be connected to the grid prior to this date. At this time, no new subsidy scheme for offshore wind farm projects under the open door procedure has been announced for the period after 21 February 2018.

In addition to the premium, compensation for balancing costs is granted. This compensation is DKK 0.18 per kWh and is granted for 20 years from the time of grid connection.
3.3 Subsidies for tendered offshore wind farms
Tendered offshore wind farms are entitled to subsidies pursuant to a so-called “Contract for Difference” (CfD). The CfD is specific for each tendered offshore wind farm and is based on the lowest tendered price.

The CfD for tendered offshore wind farms are set out in the table below.

Offshore wind farm Tender date CfD
Horns Rev 2 7 July 2004 DKK 0.518/kWh (approx. EUR 0.07)
Rødsand 2 7 February 2008 DKK 0.629/kWh (approx. EUR 0.08)
Anholt 30 April 2009 DKK 1.051/kWh (approx. EUR 0.14)
Horns Rev 3 6 December 2013 DKK 0.77/kWh (approx. EUR 0.10)

The CfD is calculated per hour as the difference between the tendered price per kWh and the spot price of electricity in the relevant area, i.e. western Denmark (DK1) or eastern Denmark (DK2), as stated by the Nordic electricity exchange, Nord Pool. The total CfD in a given hour is the product of the CfD and the output measured in that hour. The CfD is not granted for electricity produced in hours when the spot price is not positive.

Upon conclusion of the concession agreement, the CfD is embedded in Danish law in a specific provision in the RE Act17, by ordinary legislative procedure of the Danish parliament.

The CfD is subject to the electricity from the offshore wind farm being supplied to the Danish collective supply grid. The CfD period will commence when the wind farm is in operation and connected to the grid, i.e. when the first kWh is supplied to the grid. It is granted for a limited amount of electricity produced, corresponding to a certain quantity of full-load hours. In addition, the CfD is limited to a specific period, e.g. in the current Kriegers Flak tender, the CfD is granted for a maximum of 30 TWh corresponding to 50,000 full-load hours at 600 MW, and for no longer than 20 years from the time of grid connection.

Energinet.dk decides on the amount of the CfD that is paid out to the concessionaire based on metered data of electricity supplied to the grid. However, it is possible to assign the CfD payments to a third party by notification to Energinet.dk of such assignment.

Balancing costs are not reimbursed or otherwise compensated.
4. Spatial planning
4.1. General
Spatial planning for offshore installations, including wind farms, is subject to the Act on Maritime Spatial Planning18 which sets out a general framework for the planning of offshore installations and maritime activities.

The Act implements Directive 2014/89/EU on establishing a framework for maritime spatial planning. Under the Act, the Danish Minister of Business and Growth must prepare and implement a maritime spatial plan, organising the maritime activities in Danish waters. The overall purpose of the plan is to promote sustainable use of the maritime space and to contribute, through an ecosystem-based approach, to the sustainable development of energy sectors at sea, in maritime transport and in the fisheries and aquaculture sectors. Danish public authorities must take the maritime spatial plan into account when issuing permits etc. for offshore activities.

The first Danish maritime spatial plan must be adopted by 31 March 2021. We are not aware of the government planning to issue a maritime spatial plan before this date. The contents of the first plan are therefore currently unknown. Therefore, spatial planning of offshore wind farms is, for the time being, solely carried out by the DEA under the RE Act, in connection with the assessment of project applications and the planning of tender procedures.
4.2. Planning of open door wind farms
Under the open door procedure no specific sites are designated for offshore wind farms. Upon receipt of an application for a pre-investigation licence, the DEA will assess whether the area for which the licence is applied for is relevant for exploitation of energy. As indicated in section 2.3 above, the DEA’s assessment will, inter alia, include general planning considerations and rules on minimum distance from the coast.

If an application for a pre-investigation licence under the open door procedure concerns an area which is designated for the establishment of tendered offshore wind farms (see section 4.3 below), the pre-investigation licence shall be denied.
4.3. Planning of tendered offshore wind farms
Spatial planning of tendered offshore wind farms is regulated by political agreements in the Danish Parliament, designating specific sites for construction of (tendered) large-scale offshore wind farms.

In 2008, a political agreement was reached between a large majority of parties in the Danish Parliament in relation to the first site specific offshore wind tender. The tender resulted in the establishment of Anholt offshore wind farm, a 400 MW offshore wind farm in the Kattegat, the waters between Djursland and the island of Anholt.

In its report on future offshore wind power sites19, the Offshore Wind Committee – consisting of the DEA, the Danish Nature Agency, the Danish Maritime Authority, Energinet.dk, and research centre DTU-Risø – has, on the basis of a strategic environmental assessment, identified areas suitable for the establishment of offshore wind farms. According to the committee, the establishment of offshore wind farms in these areas will not have a materially adverse impact on other maritime activities.

Following the above report, invitations to site-specific tenders were agreed on in the Energy Agreement 2012 and in a political agreement on growth that was concluded in June 2014, leading to the installation of offshore wind turbines at Horns Rev 3 (400 MW), Kriegers Flak (600 MW), and at near shore areas Vester Hav Syd and Vesterhav Nord (jointly 350 MW).20
5. Grid connection
5.1. General requirements
The Danish collective electricity supply grid comprises the transmission grid and the distribution grid. The electricity transmission grid is owned and operated by the Danish TSO, Energinet.dk, a non-profit company owned by the Ministry of Energy, Utilities and Climate on behalf of the Danish State. The electricity distribution grid is owned and operated by a number of grid companies.

Requirements for grid connection mainly follow from the RE Act, the Executive Order on Grid Connection of Wind Turbines21 and Energinet.dk’s technical regulations. Terms and conditions for grid connection are usually also stipulated by the DEA in the construction licence and the electricity production licence.

In order to be connected to the grid in Denmark the wind farm owner submits a verification report to the operator of the grid to which the wind farm will be connected In the verification report the wind farm owner will demonstrate that the wind farm complies with all applicable technical, functional and documentation requirements. Provided that such requirements are met, the grid operator is obliged to connect the wind farm to the collective grid.23 As large-scale offshore wind farms are usually connected directly to the transmission grid, the grid connection will be made by Energinet.dk for such wind farms.

Decisions on grid connection made by either Energinet.dk as the TSO or an operator of the distribution grid may be appealed to the Danish Energy Regulatory Authority (DERA) within four weeks after the decision has been announced.24
5.2. Allocation of costs
In general, the offshore wind farm developer must develop and operate, at its own cost, the internal grid of the wind farm, up until the grid connection point. The grid operator is, on the other hand, responsible for developing and operating the facilities on the other side of the grid connection point. Parties will have to agree in a separate agreement on ownership limits, interfaces, and the allocation of costs, risks, maintenance etc. for the grid connection point itself.

As the grid connection point for offshore wind farms established under the open door procedure is located onshore, the owner of the wind farm pays for the necessary facilities to transport electricity all the way to shore.

However, where an offshore wind farm is established following a tender procedure, the grid connection point is placed offshore, and therefore the wind farm owner shall only be responsible for the internal grid of the wind farm up until the grid connection point, while Energinet.dk is responsible for establishing the facilities that transport the electricity to shore, such as transformer platforms and cables. The tender specifications will usually include detailed information on voltage levels, ownership limits, interfaces and the obligations of the wind farm owner in relation to the facilities for transmission of power to shore.
5.3. Liability/compensation for defective performance in the development phase.
If the owner of a tendered offshore wind farm fails to construct and connect the wind farm to the grid in accordance with the tender specifications, the wind farm owner can be held strictly liable for Energinet.dk’s losses suffered as a consequence thereof. Conversely, Energinet.dk is strictly liable for losses incurred by the wind farm, if it fails to meet the deadline for grid connection and other agreed conditions laid down in the tender specifications. The terms and conditions applicable to such strict liability, including any caps or guarantees, follow from the specific tender specifications.
5.4. Compensation for curtailment of electricity production
As TSO, Energinet.dk is entitled to order electricity producers to reduce or shut down their production if necessary. The rules for such downward regulation are different for offshore wind farms established under a tender procedure and under the open door procedure and vary according to the type of production.

Owners of offshore wind farms established following a tender procedure may be ordered to reduce or shut down production under the RE Act if necessary due to (i) defects in, or maintenance work in relation to, the grid connection facilities or the transmission grid or (ii) limitations in available transmission grid capacity.

In case of an order of downward regulation under the RE Act, Energinet.dk will compensate the owner of the offshore wind farm for losses incurred because of the reduction, corresponding to the situation where downward regulation was not ordered by Energinet.dk. This right to compensation applies for a period of 25 years, starting from the day on which the wind farm has received an electricity production licence and at least one wind turbine has been put into operation.

Owners of offshore wind farms established under the open door procedure are not subject to the same rules on downward regulation and compensation. The electricity production from these offshore wind farms may be reduced under the Danish Electricity Supply Act if necessary due to security of supply. However, under the Act, electricity produced using renewable sources has preferential access to the grid. Thus, Energinet.dk shall reduce electricity production using conventional energy sources before reducing electricity production from renewable sources. Electricity production reductions under the Electricity Supply Act may also trigger compensation to the producers, but generally in a more limited form than pursuant to the RE Act.
6. Decommissioning
6.1. General framework
Danish law does not include specific requirements regarding decommissioning of offshore wind farms. Decommissioning liabilities are regulated in the construction licence and in the electricity production authorisation issued by the DEA, as well as in the concession agreement (if the wind farm is established following a tender procedure).

During the recent near shore tender process the DEA indicated that it is not possible to exhaustively determine detailed decommissioning requirements, as the environmental requirements will have to be assessed at the time of decommissioning. Furthermore, there is no practical experience and only little knowledge on decommissioning, as no large offshore wind farms have been decommissioned in Denmark so far.

However, in early 2016 DONG Energy announced that it is planning to decommission Denmark’s first offshore wind farm in Vindeby. In its announcement, DONG Energy invites discussion on the future use of the infrastructure around the park (including transformer stations and cables), in order to assess if it could be of interest to other companies with activities in renewable energy. It is DONG Energy’s intention that Vindeby might set the first example for both efficient and environmentally friendly decommissioning of offshore wind parks, providing the companies involved with a head start in the area.
6.2. General decommissioning requirements
The construction licence and the electricity production authorisation usually include conditions under which the owner of the wind farm (the licensee) is obliged, at its own account, to restore the area to its former condition, including remediation and clean-up of the area. Further requirements may apply pursuant to a decommissioning plan prepared by the owner of the wind farm which is subject to the approval of the DEA. In addition, the DEA may require the wind farm to be removed in full or in part in accordance with a timetable stipulated by the DEA. It may further be required that the owner of the wind farm provides an adequate financial guarantee for the decommissioning of the wind farm.
7. Links
8. References
  • See Danish Ministry for Energy, Utilities and Climate’s press release of 13 May 2016 which refer to Eurostat statistics (in Danish): http://www.efkm.dk/nyheder/regeringen-skabe-vaekst-ved-saenke-elregningen.
  • See Baseline Projection 2015, published by the DEA (in Danish): https://ens.dk/sites/ens.dk/files/Basisfremskrivning/dk_energi_klimafremskrivning_2015.pdf.
  • The Energy Agreement 2012 was supported by 95% of the members of the Danish Parliament in 2012.
  • See White paper “Wind energy moving ahead – How Denmark utilises wind in the energy sector”, October 2015, available on www.stateofgreen.com.
  • Consolidated Act no. 122 of 6 February 2015 on the Promotion of Renewable Energy, as subsequently amended.
  • It follows from a recent amendment to the RE Act that the Minister for Energy, Utilities and Climate intends to revoke the delegation to the DEA to grant pre-investigation licences, see also section 2.3. The authority to issue such licence will be with the minister. At the time of writing, the delegation has not been revoked. It is therefore not yet specified whether the amendment will affect the tender procedure for offshore wind farms.
  • Consolidated Act no. 418 of 25 April 2016 on Electricity Supply, as subsequently amended.
  • See s 27 of the RE Act and s 2, cf. s 1(2) of Executive Order no. 1476 of 13 December 2010 on environmental impact assessments regarding international nature conservation sites and protection of certain species in connection with projects on the establishment etc. of offshore electricity production plants and electricity supply grids.
  • See s 3(2) of Executive Order no. 1476 of 13 December 2010.
  • See https://ens.dk/ansvarsomraader/vindenergi/aaben-doer-ordningen-havvindmoeller/information-projektudviklere-om-aaben (in Danish).
  • http://ted.europa.eu/TED/main/HomePage.do
  • A list of certifying companies accredited to issue project certifications can be found at the website of the DEA’s secretariat for the Danish Wind Turbine Certification Scheme: http://www.vindmoellegodkendelse.dk/certificering/certificerende-virksomheder/.
  • See http://www.vindmoellegodkendelse.dk/om-ordningen/teknisk-grundlag/ (in Danish).
  • Electricity produced from offshore wind turbines that incorporate one or more significant experimental aspects may receive subsidies under a subsidy scheme solely applicable for such projects. Subsidies will be granted in the form of a CfD of 70 øre/kWh for a combination of the electricity production for 15,000 hours at the wind turbine’s installed capacity (full-load hours) and an electricity production of 12.7 MWh per rotor area (m2). The entire subsidy scheme is limited to a pool of 50 MW. The CfD may only be granted in the period running to the end of 2016 and within the pool of 50 MW.
  • The installed effect accounts for 30 % and the swept area for 70 % of the calculated total amount. Specifically, pursuant to section 35 a, subsection 2, of the RE Act, the formula for determining the total amount for supported production in MWh for a wind farm is 6,600 hours x installed effect in MWh + 5.6 MWh x Swept area in m2.
  • Unrelated to the PSO negotiations, as referenced above.
  • Specifically as a subsection of section 37 of the RE Act.
  • Act no. 615 of 8 June 2016.
  • Report on large-scale offshore wind farms in Denmark – Update on the future offshore wind farm sites, April 2011.
  • In the Energy Agreement 2012, site-specific tenders in relation to an aggregate capacity of 1,450 MW were agreed on. However, during political negotiations concerning the 2014 “growth package”, it was decided to reduce one of the envisaged tenders, the near shore tender, with 100 MW, to 350 MW.
  • Energinet.dk also owns the interconnectors that combine Denmark to its neighbouring countries.
  • Executive Order no. 1115 of 18 September 2015 on grid connection of wind turbines and subsidies for electricity produced by wind turbines etc., as subsequently amended.
  • The transmission grid and the distribution grid.
  • The appeal must be submitted to Energinet.dk which, within four weeks from receipt, will forward the appeal to the DERA with a statement and the information forming the basis for the decision.
  • See http://www.dongenergy.com/en/media/newsroom/news/articles/worlds-first-offshore-wind-farm-on-its-last-turn.

France
French chapter: May 2017
1. Introduction
Pursuant to Directive 2009/28/EC of 23 April 2009 on the promotion of the use of energy from renewable sources, France is committed to developing renewable sources of electricity – up to 23% of gross final energy consumption by 2020. This objective was transposed into law1: Law No. 2015-992 of 17 August 2015 on the Energy Transition for a Green Growth confirms the target of 23% by 2020, and includes a target for 2030 of 32%. At the end of 2016, more than 11,166 GW of renewable power plants were connected to the grid, through 1,465 installations2 and wind farm production represented 4.3% of national electricity consumption3.

In the context of these objectives not only the Law of 17 August 2015 plays an important role, but also the former French Energy Policy Framework4 of 2005 needs to be considered. This Energy Policy Framework aimed to establish a national strategy for electricity generation through a Pluriannual Investment Programme (Programmation Pluriannuelle des Investissements – PPI), requiring the amount of investments in electricity to be defined by Ministerial Order.

In line with the PPI, the objectives for the development of electricity production were set out in the Order of 15 December 20095: i.e. by 31 December 2012 a total installed wind energy capacity of 11,500 MW, including 1,000 MW from offshore wind energy and other maritime energies. These targets were subsequently modified by the Order of 24 April 20166 on the development of renewable energies, which order includes the following targets:
Fixed-bottom offshore wind energyby 31 December 2018500 MW of installed capacity
by 31 December 20233,000 MW of installed capacity; and
500-6,000 MW of awarded capacity through tenders7
Other maritime energies8by 31 December 2023100 MW of installed capacity; and
200-2,000 MW of awarded capacity through tenders9

The Law of 17 August 2015 replaced the PPI by so-called Multiannual Energy Programming (Programmation Pluriannuelle de l’Energie – PPE)10, that aims to provide a road map for meeting the general energy transition policy targets – subject to scrutiny by the French parliament – in order to save energy and diversify production sources. This law required the French government to issue a decree determining precise figures for energy production. This decree, which was issued on 27 October 201611, however merely repeated the objectives already set by the aforementioned Order of 24 April 2016. It is however expected that after the elections of spring 2017, the next government will issue a new decree with a detailed roadmap.

To date, it seems unlikely that the objectives for renewable energies will be achieved, even though there has been a slight increase in the total capacity of commissioned power plants. For offshore wind farms, an important reason for not meeting the objectives is that legal proceedings have slowed down the development of most projects. With six offshore wind farm projects, with a total capacity of 3,000 MW, yet to be awarded, the target of 500 MW in 2018 is now unrealistic, and the objective of 3,000 MW in 2023 is unlikely to be reached.
In a call for tender – designated the “first call for tender” – launched in 2011 four areas have been allocated for a total capacity of nearly 2,000 MW. These areas are located off the coast of Fécamp and Courseulles-sur-Mer (Normandy), Saint-Brieuc (Brittany) and Saint-Nazaire (Pays de Loire).

In fact, a tender had already been launched seven years prior to the first call for tender, on 11 February 2004, in relation to an offshore wind farm near Veulettes-sur-Mer. In this tender Enertrag was selected by the Energy Ministry to develop the project. The project however failed – on the one hand because of the excessive price of the offers, and on the other due to strong opposition from residents, particularly fishers, resulting in legal proceedings with respect to the award of the building permit12. This experience was used to improve public information and participation in subsequent tenders, and as a result, it was decided that offshore wind farms would no longer be subject to town planning authorisation.

A second call for tender was launched in 2013, for a total capacity of 1,000 MW, in relation to two areas: Tréport (Normandy), and near the islands of Yeu and Noirmoutier (Pays de Loire) and a third tender was launched in December 2016, for a wind farm off the coast of Dunkerque (Hauts de France) with a capacity between 250 MW and 750 MW.

In addition, a tender is expected to be launched off the coast of Oleron Island (Charente-Maritime) and the Minister for Energy indicated on 26 February 2017 that yet another tender may be launched near the municipalities of Le Touquet and Berck (Hauts de France).

Consequently, even though commissioning of the projects is slower than expected, efforts are continuing towards a strong development of the offshore wind energy. Furthermore, governmental support is being considered for floating wind turbines: several calls for expressions of interest have been awarded13, and the Minister for Energy announced future tenders for pilot floating projects14.

The table below provides and an overview of offshore wind tenders.
Tender yearDesignated areaSelected candidateCapacityExpected
2011Saint-NazaireEolien Maritime France (EDF EN, Enbridge Inc.)480 MW2020
2011Courseulles-sur-MerEolien Maritime France (EDF EN, Enbridge Inc.)450 MW2020
2011FécampEolien Maritime France (EDF EN, Enbridge Inc.)500 MW2020
2011Saint-BrieucAiles Marines (Iberdrola, RES, Caisse des dépôts et consignations)500 MW2020
2013TréportLes Eoliennes en Mer (Engie, EDP Renewables, Caisse des dépôts et consignations)500 MW2021
2013Yeu & NoirmoutierLes Eoliennes en Mer (Engie, EDP Renewables, Caisse des dépôts et consignations)500 MW2021
2017Dunkerque250 to 750 MW2022
Oléron500 MW15

2. Tender procedure
Offshore wind farm projects can in principle be built and operated without a tender procedure – with an authorisation awarded by the Minister for Energy. This is however unlikely to happen, as demonstrated by a project that was being developed by Eole-RES near the municipality of Grunes, which project was stopped after the launch of the first call for tender in 2011. Since there is a strong need for coordination with the development of the transmission grid, and the French Government prefers to keep control of the development of offshore wind farms, a party that wishes to develop and operate an offshore wind farm de facto has to win a tender.
2.1 Two types of tender procedures
Two different tender procedures can be distinguished: the classical tender procedure, which was the only available procedure prior to 17 August 2016, and the so called “competitive dialogue” (dialogue concurrentiel) procedure, drawn from the competitive dialogue (dialogue compétitif) under article 30 of Directive No. 2014/24/EU dated 26 February 2014 on public procurement.
2.2 Classical tender
For the classical tender procedure16 tender specifications are drawn up by the Minister for Energy. The specifications (that are not subject to public consultation) will include a description of the characteristics of the call for tender (including the geographical area concerned and the maximum capacity forecast) and a detailed description of the installations subject to the invitation to tender, as well as specific requirements of the installations (such as the foreseen output, and technical, economic and financial conditions, including inter alia the duration and financial terms of the power purchase agreement)17. Following submission of the specifications for advice to the national regulatory authority (Commission de régulation de l’énergie), the specifications are published on the national regulatory authority’s website18 and a notice of invitation to tender is published in the Official Journal of the European Union. Tenderers are entitled to submit requests for clarification of the specifications. Answers are published on the website of the national regulatory authority19.

The national regulatory authority will examine the tender applications within the time limit set by the specifications (which may not be less than fifteen days, nor more than four months from tender closure)20 and will inform the Minister for Energy on the offers that meet the tender criteria, those that do not meet these criteria, the ranking of the candidates (including a detailed rating) and the projects that the national regulatory authority proposes to select. The Minister for Energy subsequently selects the successful candidates21. If the Minister thereby deviates from the ranking of the national regulatory authority, the Minister shall request the national regulatory authority for its opinion (which will be made public). The Minister for Energy is entitled to decide not to proceed with the tender, in which case the tenderers are not entitled to reimbursement of expenses incurred.
2.3 Competitive dialogue
The competitive dialogue22 is a relatively new procedure that was introduced by decree of 17 August 2016. It aims to allow for more flexibility and parallel discussions between the Administration23 and the tenderers. Since offshore wind is not yet considered a mature technology, this procedure aims to help the government to better define the offshore wind projects, in terms of aspects such as the location of the wind farm and the harbour, the type of foundations, and the connection to the grid. Hence, the competitive dialogue will generally be favoured by the Administration above the classical tender procedure (as is the case for the Dunkerque project).

The competitive dialogue procedure starts with a consultation document that is drawn up by the Minister of Energy. This consultation document includes the subject matter of the competitive dialogue, a provisional timetable, the requirements concerning the candidates’ technical and financial capacities, related supporting documentation and the applicable assessment procedure, as well as the criteria – with their order of importance – for the selection of the tender applications at the end of the competitive dialogue24. Following submission of the consultation document for advice to the national regulatory authority25, the consultation document is made public and a notice of the invitation to tender is published in the Official Journal of the European Union26. Similar to the classical tender procedure, candidates are entitled to submit requests for clarification and the response to such queries is published on the website of the national regulatory authority27.

The national regulatory authority will examine the technical and financial capacities of the candidates, within the time limit set by the consultation document (which may not be less than one month, nor more than two months from tender closure28) and will make a substantiated proposal to the Minister for Energy for the selected and the non-selected candidates, which is not made public29. The Minister for Energy subsequently appoints the selected candidates30. If the Minister thereby deviates from the proposal made by the national regulatory authority, the Minister shall request the national regulatory authority for its opinion (which will be made public).

If the number of candidates that meet the selection criteria is less than three, the Minister for Energy may continue the procedure with the candidates that have the required qualifications31. In that case, the Minister for Energy will invite the selected candidates to participate in the competitive dialogue32 and provides the selected candidates with draft specifications and consultation rules33.

At the end of the competitive dialogue, the Minister for Energy draws up the tender specifications34 and – following receipt of the national regulatory authority’s advice35– provides the candidates that have participated in the competitive dialogue with the tender specifications and invites these candidates to submit their offers to the national regulatory authority within the deadline set out in the tender specifications36. For the remainder of the proceedings reference is made to the classical tender procedure described above37.

It is important to note that these tender procedures are not subject to public procurement legislation38 due to the fact that: (i) the energy is not generated for the needs of the State; and (ii) the tender will result, in addition to the unconditional acceptance of the tender specifications, in the award of several administrative authorisations, as opposed to the conclusion of one global and single agreement with the State, encompassing all legal aspects of the project. Therefore, although the administrative authority is on the basis of the principle of equality subject to the principles of non-discrimination and transparency, it is not bound by European and national legislation on public procurement.
2.4 Ranking criteria and selection phase
The ranking criteria are set out by the Minister for Energy in the tender specifications. These criteria must be either weighted or hierarchized. Quantitative criteria must constitute at least 50 % of the total weighting, in order to guarantee fairness of the selection39.

For the 2011 and 2013 tenders, three groups of criteria were used for candidate selection:
  • price (40 points out of 100)
  • industrial and social quality of the project (40 points)
  • conciliation with the environment and the other uses of the sea (20 points).

For the third tender (Dunkerque), three criteria have been announced: price, optimisation of the use of the area, and environmental impact.

On the basis of the tender criteria the national regulatory authority (Commission de régulation de l’énergie) shall rank the offers40. It should be noted however that in view of the inapplicability of public procurement rules, and to allow for the introduction of other considerations, the Minister for Energy has discretionary power41 to decide on the ranking. The Minister may therefore deviate from the ranking by the regulator. In case of such deviation, the Minister must however take advice from the regulator.
Indeed, the offer ranked first by the regulatory authority is not always selected by the Minister. In 2011, a project was granted to Ailes Marines, “for economical and industrial reasons”42, whereas the regulatory authority had ranked this offer in second place. A claim by a competitor contesting the ranking was rejected by the Court43, as was a second claim that was (indirectly) related to the ranking: an applicant appealed against the decision of the selected candidate to modify its offer after the tender award, arguing that the modification was irregular and altered the terms of the selected offer44.
2.5 Modification of the offer after the award
Due to the quick pace of technological change in this sector, and the relatively long lifetime of the projects, the possibility to make changes to the initial offers of the selected candidates – notably prior to construction of the wind farm – is essential. The tender specifications allow for such modifications, provided that a large number of conditions is satisfied.

Although the specifications may vary from tender to tender, and regardless whether a tenderer is committed to develop and operate the wind farm in accordance with the terms and conditions of its initial offer45, the specifications must set out the conditions for modification of a project after the selection of the winning tenderer46 and more specifically, the specifications must address the conditions pursuant to which in the event of hardship, negotiations may take place with the government on modifications of the project.
3. Maritime spatial planning
Following the designation by the Minister for Energy of an area for the tender procedure, the préfets (local representatives of the government) shall, on the basis of wind studies, choose the location within such area that will maximise the efficiency of the wind turbines.

In their decision the préfets will take into account the different uses of the sea – mainly for freight/passenger transport, fishing, sailing, and military purposes – as well as the environmental impact on both the ocean and the landscape, which constitute the main political constraints for the projects. The préfets are assisted in the spatial planning of offshore wind farms by various coastline marine councils, i.e. advisory administrative bodies pursuant to article L.219‑6-1 of the Environment Code.
4. Subsidy mechanism and State aid control
The wind farms built further to the 2011 and 2013 calls for tender will benefit from feed-in tariffs for a period of 20 years, since these tenders were organised under the EU Commission’s State Aid Guidelines of 1 April 2008 regarding the protection of environment.

In 2016 a new premium support scheme (complément de rémunération)47 was introduced in France, consistent with the EU Commission’s Guidelines for Energy and Environment of 28 June 2014. This scheme will apply to new offshore wind farm projects, such as the Dunkerque project.

Pursuant to this new premium support scheme, EDF is obliged to purchase all electricity generated by these offshore wind farms under a power purchase agreement which shall be based on a template approved by the Ministry. The electricity price payable by EDF under these power purchase agreements is set by the winning tenderer, and is reimbursed to EDF by the State through a tax on energy consumption called CSPE48. As a consequence, the winner of the tender has the certainty of selling all the electricity generated by the wind farm, and of being paid at a price that will enable repayment of its investments.

The terms and conditions of both the tender rules and the PPA are subject to the control of the EU Commission under the State aid rules. This was not the case for the 2011 and 2013 tenders launched by the French State. These tenders are therefore subject to ex post verification, which is obviously undesirable for the generators, since their business model may be challenged once the project has been awarded and costs have been incurred. This will be different for Dunkerque and further projects, where control will take place in a more appropriate manner.
5. Prior consultation and participation in a public debate
Before the winning tenderer can obtain the required administrative authorisations (please see para. 6.), it must take the advice of the National Public Debate Commission (Commission nationale du débat public), an administrative body49, on the various impacts of the offshore wind farm and the high voltage cables50.

Until now, the National Public Debate Commission decided to organise “public debates” for each offshore wind farm project, instead of a “prior consultation process” (being a lighter tool that is used for projects without a major impact). Through these debates the Commission gathers information on the questions, concerns, and requirements of the public, with the aim to involve local residents in the projects, to improve the acceptability of these projects and to facilitate the improvement and modification of the winning tenderer’s project in order to take account of public concerns.

Public debates may thus avoid or reduce legal proceedings. However, on the other hand it should be noted that a badly conducted debate may generate frustration if people feel that they are not being heard by the wind farm developer.
6. Administrative authorisations and contracts
On 1 March 2017 a “single environmental authorisation”51,52 was introduced, that aims to reduce the complexity and duration of the administrative authorisation process. This single environmental authorisation applies to various categories of projects, including offshore wind farms.
6.1 Procedure prior to the single environmental authorisation
Prior to the introduction of the single environmental authorisation, the construction and the operation of an offshore wind farm required several administrative authorisations. In addition to these authorisations, certain contracts has to be entered into with the transmission system operator and EDF. Winning the tender merely entitled the tenderer to obtain an authorisation to operate the wind farm53, and to conclude a power purchase agreement54. All other administrative authorisations and all other contracts had to be applied for with the competent authorities, respectively entered into with the relevant parties.

It must be noted that, unlike onshore wind farms, offshore projects do not need ICPE55 authorisations or town planning authorisations or declarations. In principle this should allow for faster development of such projects, however unfortunately maritime regulation and legal challenges have slowed down most offshore wind projects.

The main documents required are described below. Depending on the location of the wind park other authorisations may however be necessary, in relation to air navigation, national defence, “Natura 2000” areas and remarkable maritime areas.

Occupation of the maritime public domain, or of the exclusive economic zone

In France offshore wind farms are usually located in the maritime public domain, i.e. up to 12 nautical miles from the coast56, however they may also be located in the exclusive economic zone, especially offshore floating wind turbines.

Wind farms located in the maritime public domain require either an administrative authorisation by the préfet, or a concession agreement with the préfet57. In addition, the part of the offshore connection that is not owned by the transport system operator (i.e. the part from the wind turbines to the underwater substation) also requires an authorisation for being located in the maritime public domain58.

Since such authorisation is precarious and revocable59 (i.e. the holder of the authorisation has no established right to maintain or renew the authorisation), generators generally favour a concession agreement to ensure that the duration of the occupancy of the maritime public domain equals the term of the power purchase agreement.

Execution of the concession is subject to the conduct of a public inquiry to gather the opinion of the public and certain public authorities60. The term of the concession can be set up to 40 years61 to secure the financial conditions of the project. Pursuant to the concession, the producer is required to pay a fee to the State for occupying the maritime public domain62, consisting of EUR 1,000 per turbine, EUR 1 per meter of grid connection cable, and EUR 6,000 per megawatt63.

Wind farms located in the exclusive economic zone (EEZ)64, require an authorisation that differs from the authorisation referred to above in relation to the maritime public domain65,66. In relation to such authorisation an annual fee is due by the producer to the French Agency for Biodiversity67.

Authorisation under the Water Act

By virtue of the former Water Act, the development and operation of offshore wind farms required several prior authorisations, to mitigate the impact on the maritime environment68. This authorisation process was simplified in 2014 by the introduction of a “sole authorisation in relation to the Water Act” (IOTA) that became the general rule in 2015. Along with the right to carry out works, it includes authorisations to disturb national reserves, classified areas, and protected species and habitats. The préfet is the competent authority to grant such sole authorisation69, after a public enquiry70. The duration of the authorisation shall be set out in the préfet’s order.

This authorisation does not apply to offshore wind farms that are located in the exclusive economic zone, in which case a different authorisation71 is required.

Agreements with the Transmission System Operator

A set of agreements, including the connection agreement, must be executed between the producer and RTE, the French transmission system operator (please see subparagraph 7.1), to allow the wind farm to feed the power generated into the grid.

Operating licence

The operating licence is granted to the winning tenderer by the Minister for Energy for the total duration of the operating phase72.

The operating licence is generally withdrawn in case of late commissioning or interruption in the operation of the wind farm, exceeding three years. However, for offshore production facilities the Minister for Energy may – upon request of the producer – extend this three-year period up to ten years, which ten-year period may subsequently be extended twice by another three-year period(i.e. in total up to sixteen years)73.

Power purchase agreement (with EDF Purchase Obligation Department)

Pursuant to the tender rules, the winning tenderer is entitled to enter into a regulated power purchase agreement (PPA) with EDF’s Purchase Obligation Department, allowing the producer to sell its electricity at the price mentioned in its offer, in accordance with the terms and conditions of the tender specifications.

The PPA is concluded for a fixed term, which, for offshore wind farms, is currently set at 20 years, with the aim of allowing producers to receive a return on their investment. After the expiration of the PPA term, and provided that the producer is still allowed to occupy the maritime public domain, the electricity generated by the wind farm can be sold on the market.
6.2 Single environmental authorisation
Pursuant to the Law-Decree on environmental authorisation of 27 January 201774 and its two implementing decrees75, as from 1 March 2017 only one environmental authorisation is needed, instead of the numerous authorisations that used to be required, such as, inter alia, the authorisation for the use of water, the operating permit, the authorisation to occupy the public domain, authorisations regarding air traffic and national defence and authorisations with respect to the performance of works in “Natura 2000” areas and remarkable maritime areas.

The introduction of this single environmental authorisation aims to simplify the authorisation procedure and reduce the time needed for the development of offshore wind farm projects. Under this new legislation competent authorities are now required to grant authorisations within a period of nine months (instead of the previous 12-15 months).
7. Grid connection
As indicated by the International Agency for Energy (IAE) in its recent report about France: “for historical reasons, the French grid was developed for centralised generation by nuclear plants generating baseload power”. The development of renewable energies is now changing the structure of the transmission grid, as this requires important works to the grid to connect small PV and wind farms, as well as major renewable plants such as offshore wind farms.

Consequently, offshore wind energy producers are required to enter into several contracts with RTE, the transmission system operator, that has a constitutional, legal monopoly with respect to the realisation and operation of the connection to the transmission grid.
7.1 Agreements with RTE
The winning tenderer must enter into a connection agreement with RTE for the realisation of the grid connection. The connection agreement will include, among other things, a deadline for realising the connection and the costs for the realisation of the connection, which cost shall be for the account of the winning tenderer. This connection agreement enables RTE to start the works to commission the connection.

In addition to the connection agreement, the offshore wind energy producer must enter into the following agreements with RTE:
  • a grid access agreement, which defines the conditions of access to the electricity grid (electricity metering, subscribed power and tariff option, power quality) and addresses the appointment of a balancing responsible and a programming entity;
  • an operating agreement, which defines the relationship with RTE (i.e. its national dispatching), and the operating rules to be complied with in relation to the connection in normal operating mode and in incident mode, and, as the case may be, supply scheme and protection settings;
  • a testing agreement, which specifies the operating and driving relations between the parties during the testing period. This agreement will need to be entered into prior to commissioning of the connection, and will expire when parties enter into the operating agreement; and
  • a performance agreement, which determines the technical, legal and financial conditions relating to the technical performance of the installation, at the time of its commissioning and throughout its operation period. More precisely, this agreement defines the controls to which the installation is subject before its industrial commissioning and defines how the non-conformities are remedied. During the operation period, controls will be conducted by RTE and the agreement lays down a procedure for the treatment of performance gaps. This agreement is only required in case of connection to the high voltage grid (which is currently the case for all offshore installations, due to the installed power, which is beyond the threshold of 12 MW).

When connection works cross private properties, RTE may benefit from a declaration of public utility, granting RTE the right to cross such properties. Such declaration is issued either by the préfet (below 225 kV), or by the Minister76, following an impact study and a public enquiry.
7.2 Compensation for connection delay
The regulations set out the terms and conditions pursuant to which a power plant is entitled to receive compensation for grid connection delays77. Since this compensation scheme is applicable to power plants in general, it should be noted that, in the context of the amount of the investment required for the development of offshore wind farms, the compensation that is offered to offshore wind parks under this scheme is low. Recently an act78 was passed that modified the Energy Code79 to provide specific compensation to offshore wind farm operators. Such compensation is due in the event of a delay in the connection of wind farm projects that is caused by RTE or contractually for the risk and account of RTE, pursuant to the connection agreement. The compensation level, as well as its yearly ceiling, will be set out in a decree and a Ministerial Order, that have not been published yet.
8. Taxation
Apart from the fees that are due for occupying the public domain, as mentioned in paragraph 4.1 above, the offshore wind energy producer shall pay an annual amount of EUR 15,471 per megawatt of installed capacity80. This fee is collected by the State and granted to the local municipalities, and local “users of the sea”.
9. Decommissioning
Pursuant to the tender rules, and in compliance with environmental law, there is a general restoration requirement at the end of the occupation of the public domain. The offshore wind energy producer must inform the préfet that issued the administrative authorisation for occupation of the maritime public domain (or entered into the concession agreement, as the case may be), at least five years before the end of the operation phase.

The restoration must be performed in compliance with the conditions of the authorisation (or the concession agreement). The préfet may however prescribe specific conditions for the restoration. In addition, the Minister for Energy may through the tender specifications require specific actions from the winner of the tender. For example, in the second call for tender, the Minister for Energy required the producer to conduct a study, at least two years before the end of the operation of the wind farm, in order to optimise the decommissioning and the rehabilitation of the site, taking into account the impact of the decommissioning on the environment, maritime activities and security.
10. Litigation
The Decree81 of 8 January 2016 provides a specific legal framework for claims filed against various decisions regarding offshore energy production and transportation (please see para.8.1), with the aim to reduce the duration of legal proceedings, that have slowed down offshore wind farm projects in recent years.
10.1 Jurisdiction
This decree gives direct jurisdiction to the Administrative Court of Appeal of Nantes to settle litigation in relation to:
  • offshore renewable energy facilities and works;
  • grid connection works, in so far as the connection is at least partially located offshore;
  • port works dedicated to building, storage and pre-assembly of the above-mentioned works, and transportation and dredging operations related thereto82.

The Court rules at first and last instance, which means that there is no second level of judicial authority. The sole remedy that is available after receipt of a Court judgement is submission to the Conseil d’Etat (the Administrative Supreme Court).

Most of the authorisations referred to in paragraph 6 will fall under this unique jurisdiction, such as:
  • the decision by which the Minister for Energy appoints the winning tenderers;
  • authorisations to operate the wind farm;
  • decisions of the competent préfet to approve of network facilities;
  • the single environmental authorisation;
  • the sole authorisation in relation to the Water Act (IOTA);
  • authorisations/concessions to occupy the maritime public domain;
  • authorisations to create artificial islands, installations or infrastructures on the continental shelf and in the exclusive economic zone; and
  • the building permits.

10.2 Deadline to lodge a claim
The claimant is required to file an action within four months following the notification of the challenged decision – where the claimant is the applicant of the authorisation, or within four month following the publication date of the challenged authorisation – where the claimant is a third party83.

Alternatively, third parties may also submit an administrative request before the préfet within two months following the publication date of the challenged authorisation, to request the administrative authority to withdraw its decision. Subsequently, third parties may file an action before the Administrative Court within two months following the préfet’s answer (or upon the expiration of a two month period as from the date of such request, in which case the préfet is deemed to have refused the request).

Within 15 days following the date of submission of its claim, the claimant must inform both the administration and the applicant of the authorisation of the commencement of proceedings84. The failure to comply with this notification requirement results in the claim being inadmissible.
10.3 Tightening of the procedure
Pursuant to the Decree of 8 January 201685, the Administrative Court may set a period, after which the claimant is no longer allowed to add new legal juridical means or arguments (“crystallisation of means”). This “crystallisation of means” was created in 2013 in relation to town planning disputes, and is only exceptionally used by the administrative courts. The Administrative Court of Nantes is not obliged to make use of this power and it can currently not be foreseen whether it will actually do so.

Pursuant to the decree of 8 January 2016 the Administrative Court of Nantes shall render its decision within 12 months from the initiation of proceedings86. This deadline is not compelling, as the Court remains competent after this term. The Court will however take this rule into consideration and endeavour to give judgement within this period.
11. References
  • Article 2 of Law No. 2009-967 dated 3 August 2009 programming the implementation of the Grenelle Environmental Forum.
  • Source :http://www.statistiques.developpement-durable.gouv.fr/fileadmin/documents/Produits_editoriaux/Publications/Datalab_essentiel/2016/datalab-essentiel-60-tableau-bord-eolien-2016-t3-novembre2016.pdf.
  • Idem.
  • Law No 2005-781 dated 13 July 2005 setting down energy policy orientations.
  • Ministerial Order dated 15 December 2009 concerning the pluriannual investment programme for electricity.
  • Ministerial Order dated 24 April 2016 relating to the development of renewable energies.
  • The actual capacity tendered would be subject to price developments and dependent on the availability of favourable areas and on feedback received in relation to the implementation of earlier projects.
  • Such as floating offshore wind energy and marine current power.
  • The actual capacity tendered would depend on feedback from pilot projects and would be subject to price developments.
  • Law No. 2015-992 dated 17 August 2015 on Energy Transition for Green Growth.
  • Decree No 2016-1442 dated 27 October 2016 on Pluriannual Energy Programming.
  • Administrative court of first instance of Rouen, 3 November 2011, Association Vent de Travers, No. 0900146 and 0900658.
  • Administrative court of appeal of Nantes, 27 September 2013, Association Vent de Travers, No 12DA00017.
  • Awarding of pilot projects by the Ministry of Energy, on 3 November 2016: http://www.developpement-durable.gouv.fr/resultats-des-appels-projets-eolien-flottant-et-energies-marines.
  • Announcement of tenders regarding future pilot projects concerning floating wind farms: http://www.developpement-durable.gouv.fr/resultats-des-appels-projets-eolien-flottant-et-energies-marines.
  • Announcement of the Minister of Energy : http://www.nouvelle-aquitaine.developpement-durable.gouv.fr/consultation-du-public-sur-l-eolien-en-mer-au-a9430.html
  • Decree No 2016-170 dated 18 February 2016 relating to the tendering procedure for electricity generating installations ; Articles R.311-13 to R.311-25 of the Energy Code.
  • Article R.311-13 of the Energy Code.
  • Article R.311-16 of the Energy Code.
  • Article R.311-18 of the Energy Code.
  • Article R.311-22 of the Energy Code.
  • Article R.311-23 of the Energy Code.
  • Decree No 2016-1129 dated 17 August 2016 on the competitive dialogue procedure for electricity generation facilities; Articles R.311-25-1 to R.311-25-15 of the Energy Code.
  • The DGEC, i.e. the services of the Ministry for Energy, in charge of Energy and Climate matters.
  • Article R.311-25-1 of the Energy Code.
  • Article R.311-25-2 of the Energy Code.
  • Article R.311-25-3 of the Energy Code.
  • Article R.311-25-4 of the Energy Code.
  • Article R.311-25-6 of the Energy Code.
  • Article R.311-25-6 of the Energy Code.
  • Article R.311-25-7 of the Energy Code.
  • Article R.311-25-7 of the Energy Code.
  • Article R.311-25-9 of the Energy Code.
  • Article R.311-25-8 of the Energy Code.
  • Article R.311-25-12 of the Energy Code.
  • Article R.311-25-13 of the Energy Code.
  • Article R.311-25-14 of the Energy Code.
  • Article R.311-25-15 of the Energy Code.
  • See: order for interim relief of the Administrative Court of first instance of Cergy-Pontoise, 17 June 2014, No. 1404907, Société WPD offshore; and judgment of the Administrative Court of Appeal of Bordeaux, 18 October 2016, No. 16BX00728
  • Article R.311-13, 3° and R.311-25-12, 2° of the Energy Code.
  • Article R.311-22 of the Energy Code.
  • Article R.311-23 of the Energy Code.
  • Deliberation of the CRE dated 5 April 2012 regarding the selection, by the Minister of Energy, of the offers concerning the offshore wind farm tender.
  • Administrative Court of first instance of Rennes, 17 December 2015, No 1301372 and 1304960.
  • Administrative Court of first instance of Rennes, 16 February 2017, No 1503587 and 1504575.
  • Article R.311-6 of the Energy Code.
  • Article R.311-27-1 of the Energy Code.
  • Decree No 2016-682 dated 27 May 2016 regarding the purchase obligation (FIT) and premium.
  • Standing for “contribution au service public de l’électricité”.
  • Article L.121-8 of the Environment Code.
  • Article R.121-2 of the Environment Code.
  • Law-decree No. 2017-80 dated 26 January 2017 regarding the environmental authorisation.
  • On the same date two implementing decrees were issued:Decree No. 2017-81 dated 26 January 2017 regarding the environmental authorisation and Decree No. 2017-82 dated 26 January 2017 regarding the environmental authorisation.
  • Article L.311-11 of the Energy Code.
  • Article L.311-12 of the Energy Code.
  • ICPE stands for: installations classified for environmental protection.
  • Article L.2111-4 of the General Code on Public Properties.
  • Articles L.2124-1 et sq., articles R.2124-1 et sq. of the General Code on Public Properties.
  • Article L.2124-1 of the General Code on Public Properties.
  • Pursuant to French administrative law, ‘precarious and revocable’ means that the authorisation can be revoked if the general interest justifies the end of the utilisation of the public domain by the holder of the authorisation.
  • Article L.2124-3 of the General Code on Public Properties.
  • Article R.2124-1 of the General Code on Public Properties.
  • Article L.2125-1 of the General Code on Public Properties.
  • Order dated 2 April 2008 establishing the tariff for offshore wind turbines occupying the public domain.
  • Usually from 12 to 200 nautical miles from the coast.
  • Law-Decree No. 2016-1687 dated 8 December 2016, regarding maritime areas falling within French Republic sovereignty or jurisdiction. This Law-Decree has changed the legal regime for occupying the EEZ. Although a decree to implement this change is still to be published, it is expected that the Maritime Préfet will remain the administrative authority in charge of delivering the required authorisation.
  • Please note that unlike for the maritime public domain, no concession agreements can be entered into in relation to the EEZ.
  • Article 27 of Law-Decree No. 2016-1687 dated 8 December 2016.
  • Currently codified in Art. L.214-1 and R.214-1 of the Environment Code.
  • Article R.214-6 of the Environment Code.
  • Article R.214-8 of the Environment Code.
  • Decree No. 2013-611 dated 12 July 2013 on the regulations applicable to artificial islands, installations, structures and their associated installations on the continental shelf, in the economic zone and the ecological protection zone and in relation to the layout of cables and submarine pipelines.
  • Articles L.311-5 and L.311-11 of the Energy Code.
  • Article R.311-10 of the Energy Code.
  • Law-decree No. 2017-80 dated 26 January 2017 regarding the environmental authorisation.
  • Decree No. 2017-81 dated 26 January 2017 regarding the environmental authorisation; Decree No. 2017-82 dated 26 January 2017 regarding the environmental authorisation.
  • Articles L.323-3 and R.323-1 of the Energy Code.
  • Decree No. 2016-1316 dated 5 October 2016 fixing the scale of allowance payable in the event of the connection deadline being exceeded (Articles R.342-4-7 and R.342-4-8 of the Energy Code). Law No. 2017-227 dated 24 February2017 ratifying Law-Decree No. 2016-1019 of 27 July 2016 relating to the self-consumption of electricity and No. 2016-1059 of 3 August 2016 relating to the generation of electricity from Renewable energy and to adapt certain provisions relating to electricity and gas networks and to renewable energies.
  • Article L.341-2 of the Energy Code.
  • Article 1519B of the General Tax Code.
  • Decree No. 2016-9 dated 8 January 2016 providing the legal framework for the appeals filed against various decisions regarding the offshore energy production and transportation facilities from renewables.
  • Article R.311-4 of the Code of Administrative Justice.
  • Article 3 of Decree No. 2016-9 dated 8 January 2016 providing the legal framework for the appeals filed against various decisions regarding the offshore energy production and transportation facilities from renewables.
  • Article 4 of Decree dated 8 January 2016.
  • Article 4 of Decree dated 8 January 2016.
  • Article 1 of Decree dated 8 January 2016.

The Netherlands
Dutch chapter: December 2016
1. Introduction
The Energy Agreement for Sustainable Growth that was entered into in 2014 between, inter alia, the Dutch government, environmental and nature protection organisations and energy companies, has been an important driver for the development of offshore wind parks in the Netherlands. While there was some activity in the field of offshore wind prior to the Energy Agreement, resulting in approximately 1000 MW offshore wind capacity in operation and under development1 , the Energy Agreement announced an increase in offshore wind energy capacity to 4,450 MW in 2023 in order to meet the Dutch renewable energy target of 16% in 2023.
Consequently, a total extra capacity of 3,450 MW has to be constructed and made operational ultimately by 2023. For this purpose, the Dutch State has developed a new legislative framework of phased tenders for subsidy and wind permits to take place in the period 2015-2019.
This process is strictly controlled by the Dutch government, setting parameters for, inter alia: the pace at which the proposed new capacity will be developed; the maximum capacity of the wind parks; planning and zoning; and the grid connection. An important prerequisite for the development of the additional offshore wind energy capacity is a 40% cost reduction over the period 2015-2019.
The below table provides the tender schedule and key parameters.

Tender yearDesignated area Capacity Maximum tender amount2 Base electricity price
2016 Borssele I & II 700MW EUR 0.124/kWh EUR 0.029/kWh
2016 Borssele III, IV & V3 700MW EUR 0.11975/kWh EUR 0.030/kWh
2017 Hollandse Kust (South) I & II 700MW EUR 0.1075/kWh -
2018 Hollandse Kust (South) III & IV 700MW EUR 0.10325/kWh -
2019 Hollandse Kust (North) 700MW EUR 0.10/kWh -

The first tender took place in April 2016. On 5 July 2016 the government announced that wind permits and subsidy for the development of wind parks on the sites Borssele I and II have been awarded to DONG Energy Borssele I B.V. for a strike price of EUR 0.073/kWh. With this strike price, the government’s 40% cost reduction requirement for the entire period up to 2019 was achieved in the first tender. The permits and subsidy for the wind park sites Borssele III and IV were awarded on 12 December 2016 to the consortium of Shell, Van Oord, Eneco and Mitsubishi/DGE for a strike price of 0.054/kWh.
2. Subsidy
2.1 General
The Sustainable Energy Incentive Scheme or SDE+ offers an operating (premium feed-in-tariff) subsidy for renewable energy. It compensates the difference between the production costs of renewable energy4 (the “base amount”) and the cost price for fossil energy (the “correction amount”). Accordingly, the amount of the SDE+ contribution depends on the correction amount and therefore on the evolution of the energy price.
The SDE+ subsidy decision reflects the maximum subsidy over the entire period of the subsidy (depending on the renewable technology being a period of 5, 8, 12 or 15 years). This maximum is determined based on the indicated capacity and the maximum number of full load hours for the relevant technology. The final subsidy payments are calculated per year, based on the actual amount of energy produced and the actual energy price.
Although the SDE+ scheme resembles the UK contract for difference, there are many differences. Two important ones, for example, are that in the Netherlands:
  • the premium is capped at a certain floor for the market price (referred to as the base price). Consequently, if the market price is below the base price, the difference will not be compensated in the subsidy
  • if the market price exceeds the reference price, the upside can be retained by the producer.

If the maximum production eligible for subsidy in a certain year has not been used, the remaining production capacity eligible for subsidy can be used in the following year. On top of the subsidy period of 15 years, another whole year can be taken to reach the remaining unused production eligible for subsidy, in effect stretching the subsidy period to a total of 16 years (forward banking). On the other hand, if production in a certain year exceeds the maximum production eligible for subsidy in that year, the excess production can be used in a following year if production is lower than expected in the later year, provided that this form of banking is restricted to no more than 25% of the annual production eligible for subsidy (backward banking).
No SDE+ subsidy is granted for renewable electricity fed into the grid in case of negative electricity prices over a period in excess of six hours.
2.2 Offshore wind subsidy
SDE+ subsidy for offshore wind parks is obtained through a tender procedure that is to be distinguished from the regular SDE+ programme. The SDE Decree and its General Implementing Regulations form the basis for the offshore subsidy tenders. In addition, for each tender a specific Ministerial Order is issued, containing further – to a large extent site specific – tender rules for the relevant sites.
At present Ministerial Orders for the first two tenders have been published: the Tender Regulation 2015 and the Tender Regulation 2016. Key issues addressed in these Tender Regulations include:
  • the timing of the tender
  • the duration of the subsidy period (15 years)
  • the deadline for commencement of operation (five years after the subsidy award)
  • the maximum tender amount and base electricity price (see table in section 1)
  • the minimum and maximum capacity of the wind park (for the sites Borssele I, II and IV: respectively 351 MW minus the number of MW of the turbine with the lowest capacity and 380 MW; for the site Borssele III: 331 MW minus the number of MW of the turbine with the lowest capacity and 360 MW)
  • tender eligibility criteria (see below)
  • criteria for ranking the bids (see below).

The subsidy tender procedure for offshore wind as set out in the SDE Decree and its subordinate regulations were approved by the European Commission as compatible aid. The individual subsidy decisions with respect to installed capacities in excess of 250 MW will not require notification to the European Commission under the state aid rules.
The subsidy application process is linked to the application procedure for the wind permits through the Offshore Wind Energy Act, which contains the key requirements in relation to the wind permits5. Wind permits will only be awarded to a party that has been granted SDE+ subsidy in the tender, aiming to ensure an efficient use of the sea.
2.3 Eligibility requirements
Subsidy applications must satisfy the below criteria. Applications that do not meet these requirements will be disregarded.
Financial feasibility

The development and operation of the wind park should be financially feasible. To determine whether this requirement is fulfilled, the applicant’s equity capital is required to equal at least 10% of the total investment of the wind park. The fulfilment of this equity capital requirement can be demonstrated by the most recent annual accounts of the applicant, its consortium partners or its parent company, as the case may be. The annual accounts may not date back more than three calendar years from the year of application.
For the fulfilment of this equity capital requirement the applicant may rely on its parent company (or in case of a joint venture, on the equity of one or more of its joint venture partners). A company under incorporation may rely on both the equity capital of its parent company and of its incorporator. A limited partnership may rely on the equity of the general partner and the general partner’s parent company (or parent companies). The 10% equity requirement only applies in relation to the period prior to the permit and subsidy award.
Unlike the Tender Regulation 2015, the Tender Regulation 2016 contains restrictions on the reliance on a parent company/joint venture partner(s). Pursuant to the Tender Regulation 2016 an applicant has to provide the written consent of its parent company/joint venture partner(s) and such parent company/joint venture partner(s) may not be relied on by more than two applicants. Pursuant to the explanatory notes to this Regulation, this has been introduced to avoid submission, for tactical reasons, of a large number of applications through different bidding entities.
The subsidy application must include a plan for the development and operation of the envisaged wind park, as well as a financing plan. If the applicant’s own assets amount to less than 20% of the investment required for the wind park, the applicant is required to provide a letter of intent from a financier in relation to the financing of the remaining part of the 20%.
Economic feasibility

A second requirement is economic feasibility. In order to determine whether the applicant meets this requirement it has to submit an income statement specifying the envisaged investment costs, project costs and benefits and the projected return during the subsidy period. In addition, the application must contain a wind energy generation calculation by a reputable independent organization, including the technical specifications of the wind park and the P50-value for the annual electricity production. The full load hours on the basis of the net P50-value constitute the maximum number of full load hours that are used to determine the annual number of kWh that is eligible for subsidy.
Start of construction

The application must include a time schedule, setting out a number of milestones (including the start dates for commencement of construction, operation and the subsidy period), demonstrating that it is possible for construction to start within four years after the date on which the wind permit has become irrevocable.
Achievability and technical feasibility

The applicant’s project plan should be “achievable” and “technically feasible”. It is felt that the bank guarantees required of the winning bidder under the implementation agreement6 with the Dutch State provide important comfort that the subsidy receiver meets these conditions.
Compliance with site decision

The application must comply with a so-called “site decision”, which is a new instrument, developed specifically for the offshore wind tenders. See Section 3.2 for detailed information on the site decision.
2.4 Ranking the applications
Eligible applications that meet the above requirements will be ranked on the basis of the tender amounts, with subsidy awarded to the application with the lowest tender amount. This means that per-site subsidy will be awarded to only one project. The Tender Regulations 2015 and 2016 however allow parties to submit three separate subsidy applications: for site I, for site II and a combined application for sites I and II jointly. In the event of multiple applications for one site by one applicant, all applications by that applicant for the site in question will be denied. The same applies in the event of multiple combined applications by one applicant: all combined applications will be denied.
A combined application is deemed to constitute one bid and will therefore either be rejected or awarded as a whole. The rationale is that it would otherwise not be possible to realise the envisaged synergy benefits. Although considered as one bid, a combined application must specify the tender amount per site and will only be successful if these tender amounts constitute the lowest amount for each of the sites.
2.5 Subsidy award
After the tender closure, the Minister of Economic Affairs will decide on the award within 13 weeks, which may be extended by a further 13 weeks. The tender award is subject to objection and appeal proceedings. Objections must be filed within six weeks of the date of the tender award. Subsequent appeals can be filed within six weeks of the date of the decision on the objection.
2.6 Implementation agreement and bank guarantees
The subsidy is awarded subject to two conditions precedent:
  • the winning applicant entering into an implementation agreement with the Dutch State in the form as attached to the Tender Regulation, within two weeks from the date of the subsidy award
  • the provision of a bank guarantee in the amount of EUR 10m by a bank established within the EU, in the form as attached to the implementation agreement, within four weeks of the date of the subsidy award.

The main aim of these conditions is to give the Dutch State comfort that the wind park will become operational on time. If the winning applicant fails to satisfy these conditions within the deadlines, the subsidy will be awarded to the next ranked application.
A second bank guarantee7 – in lieu of, and in the same form as, the first bank guarantee, but for an amount of EUR 35m – shall be due within 12 months after the date of the subsidy award.
Pursuant to the implementation agreement, the bank guarantees provide financial security for any and all claims the State may have under that agreement. A one-off penalty of EUR 10m will be immediately due and payable if the subsidy decision is revoked within 12 months at the request of the applicant or if the second bank guarantee is not provided on time. In addition, the subsidy receiver will incur a penalty in the amount of EUR 3.5m in case of a delay in the start of operation of the wind park, increased by EUR 3.5m for each month that the delay continues (the penalty may become due a maximum of ten times). The penalties will be due without any proof of default or summons. The implementation agreement provides for an escape route if the site decision is amended following legal proceedings post subsidy award. In that case the subsidy receiver can withdraw from the implementation agreement without incurring any penalty.
2.7 Essential changes in the project plan post subsidy award
Pursuant to the SDE Decree, the winner of the tender must comply with its plan for the construction and operation of the wind park, as submitted together with its subsidy application. However, the SDE Decree allows for “essential changes” to this plan in relation to the development or operation of the wind park, providing for flexibility with regard to key characteristics of the wind park to enable bidders to use the most up-to-date technology and pursue cost reductions through innovation, as envisaged by the Energy Agreement. Any such deviation from the original plan requires an exemption granted by the Minister of Economic Affairs.
The Policy Rules Amendment of the Production Installation for Offshore Wind Energy provide insight into the decision-making process of the Minister in case of exemption requests in relation to essential changes with respect to characteristics of the production installation.
Pursuant to the policy rules “essential changes” are changes to the production installation that influence:
  • its location
  • its nominal capacity
  • the start of production within four years after the permit has become irrevocable
  • compliance with the site decision
  • compliance with the Offshore Wind Energy Implementing Regulations
  • the technical, financial and economic feasibility of the project plan.

The following changes shall in any event qualify as essential changes:
  • the number of turbines of the production installation
  • the positioning of the turbines
  • the hub height
  • type of turbine
  • type of foundation.

A request for an exemption must be accompanied by an explanation of the effect of the change on the aspects set out above, as well as by an amended wind energy yield calculation, if applicable. The request for an exemption shall be granted if the Minister would have granted the subsidy application, had the change been included in the original subsidy application. This ensures that after the change, the realisation and operation of the production installation remains in compliance with the criteria as set during the application phase. Consequently, the change will not affect the position of the application in the ranking.
According to the explanatory notes to the policy rules, the grant of an exemption does not affect the tender price per kWh and the maximum number of kWh for the subsidy period, as set out in the subsidy decision.
An exemption is subject to objection and appeal proceedings.
2.8 Subsidy transfer
Pursuant to the SDE Decree the subsidy may – unless exempted by the Minister of Economic Affairs – not be transferred to a third party prior to the start of operation of the wind park. However, it is possible to transfer the SDE+ decision after the start of operation of the park, without an exemption.
3. Spatial planning
3.1 Designated areas for offshore wind
One of the key elements of the new legislative framework for offshore wind is the central role played by the Dutch government in the planning and zoning of the wind parks, through the appointment of designated areas for offshore wind and subsequently adopting, within these areas, so-called site decisions for the development of the wind parks.
In the National Water Plan8 – which finds its legal basis in the Water Act and contains the water policy and related spatial planning for the Netherlands – the Dutch Ministers of Economic Affairs and Infrastructure & Environment have allocated four areas for offshore wind parks. The development of offshore wind parks will be restricted to these areas; wind permits will not be awarded for areas outside these designated areas.
These designated areas offer a total capacity of over 17,500 MW (assuming a 6 MW per km2 ratio). However, due to conflicting interests with other offshore activities, the areas that may actually be used for wind parks are likely to be smaller. The five tenders organised by the Dutch State to meet its renewable targets for 2023 are for the areas Borssele and Hollandse Kust.
Except for two strips in the Hollandse Kust area that are located 10-12 nautical miles off the Dutch coast, the four designated areas lie behind the 12-mile zone (the zone 22 km off the Dutch shore).
3.2 Site decisions
Within aforementioned designated areas wind parks may only be developed on locations designated by the Minister of Economic Affairs in a so-called site decision (in Dutch: kavelbesluit). The site decision is a new instrument that finds its legal basis in the Offshore Wind Energy Act that entered into effect on 1 July 2015.
Pursuant to this Act, the Minister of Economic Affairs shall in the site decision take into consideration:
  • the fulfilment of social functions of the sea, including an efficient use of the sea
  • the implications of the site decision for third parties9
  • environmental interests, including ecological interests
  • wind park development costs on the relevant site
  • the interest of having an efficient grid connection.

The site decision shall in any event include terms and conditions in relation to:
  • the rights and interests of third parties in relation to the relevant site
  • the protection of the environment
  • the preservation of Natura 2000 areas and compensation measures pursuant to the Nature Protection Act
  • the provision of exemptions under the Flora and Fauna Act
  • the interest of an efficient use of the site by the wind park
  • the term of the wind permit
  • the costs incurred for the preparation of the site decision, including the conduct of relevant surveys and the required security for decommissioning.

In addition, the site decision shall contain a description of:
  • the measures that aim to reduce or mitigate the effects of the development and operation of the wind park
  • temporary measures to develop the wind park
  • the geographical dimension of the site and the cable route
  • the results of the meteorological and oceanographic survey, the soil survey, the ecological soil survey, the archeological survey and other ecological surveys.

To integrate the aforementioned interests and measures into the site decision, the Dutch State conducts a large number of surveys. The results of these surveys will be published in the site decision. Permit applicants therefore do not have to make an individual assessment of these aspects. The costs in relation to these surveys is for the account of the State and will not be borne by the party that wins the tender.
The terms and conditions of the site decision shall to a large extent be location specific. The site decisions that have already been published include a number of specific pre-conditions for the wind park, such as the minimum rotor surface of individual turbines and the aggregate rotor surface of all wind turbines jointly, the maximum number of turbines that may be installed, the minimum and maximum capacity of the individual wind turbines, the minimum distance between the turbines, the minimum tip height and the maximum height and the permitted turbine foundations (other foundations may be permitted pursuant to an environmental impact assessment). Mitigation measures that have been included in the current site decisions include, for example: measures to reduce bird-wind turbine collisions; noise reduction requirements to avoid disruption of the habitat of porpoises, seals and fish; and the rotation of the turbine blades out of the wind in the event of large bird migration. Other mitigation measures may consist of noise reduction during pile driving to protect porpoises and seals, as well as measures to protect bats. Pursuant to the site decisions that have currently been published the permit holder is obliged to make demonstrable efforts to design and build the wind park in such a way that it actively enhances the sea’s ecosystem and contributes to the local and regional economy and to cooperate in the environmental monitoring and evaluation programme of the Minister of Economic Affairs.
4. Permit
Ultimately, the tender process will determine to whom a wind permit is granted to build an offshore wind park on a site that is designated pursuant to a site decision. The Offshore Wind Energy Act sets out the legal basis and the key requirements for the wind permits. The permit requirements are further elaborated on in the implementation regulation to this Act.
The wind permit will be a relatively concise document, since many issues that would generally be addressed in the permit will be included in the site decision.
A permit will only be awarded if the permit application sufficiently demonstrates that the development and operation of the wind park is achievable – it is technically, financially and economically feasible; can start within four years of the date on which the permit has become irrevocable; and complies with the site decision. These requirements are identical to the eligibility requirements in relation to the SDE+ subsidy.10
For as long as subsidy is required for the development and operation of offshore wind parks,11 the wind permit application process is linked to the SDE+ subsidy application:
  • the wind permit procedure will coincide with the SDE+ subsidy procedure. The Minister will decide on the permit applications simultaneously with the SDE+ applications
  • wind permit applicants will need to comply with the applicable subsidy requirements
  • if more eligible permit applications are submitted, the Minister will issue the wind permit to the party that is awarded the subsidy.

The wind permit award is subject to objection and appeal proceedings. Objections must be filed within six weeks of the date of the award. Subsequently appeal can be filed within six weeks of the date of the decision on the objection.
Pursuant to the Offshore Wind Energy Act, the term for which the wind permit is granted shall not exceed 30 years.
The wind permit may be transferred to a third party with the consent of the Minister of Economic Affairs. Neither the Offshore Wind Energy Act nor its explanatory memorandum address the grounds for obtaining such consent. It is possible for two or more parties to jointly submit a permit application and to jointly become permit holder. A transfer by one of the joint permit holders of its share in the permit also requires the consent of the Minister. However, if one of the joint permit holders ceases to exist, this will not affect the validity of the permit, which will in that case be held by the remaining permit holders.
5. Grid connection
5.1 Offshore grid
The new offshore wind parks shall be connected to an offshore grid to be developed and operated by Dutch transmission system operator TenneT TSO.12 The offshore grid aims to realise a 40% cost reduction for the connection of the offshore wind parks and a 10% overall cost saving for offshore wind energy due to a reduction in investment costs, financing charges and maintenance costs as a result of synergy benefits, as well as cost savings for the wind parks due to the higher availability of the connection to the offshore grid.
For each of the five offshore wind tenders TenneT will construct a platform at sea. Each platform will connect two wind parks13 to the national onshore transmission system through two 220kV-cables, each cable providing a guaranteed capacity of 350 MW. Capacity in excess of 350 MW will not be guaranteed by TenneT. Pursuant to the Tender Regulations 2015 and 2016 it will, however, be allowed to exceed this capacity up to 380 MW14 (overplanting). The wind turbines will be connected to the TenneT platform through 66kV cables, making the Dutch offshore wind farms the first in the world to be connected by a voltage level of 66kV instead of 33kV.
5.2 Development framework and investment plan
In order to plan the investment in the offshore grid, the Dutch government deemed it desirable to provide guidance in the form of a development framework. This framework outlines the design and construction of the offshore grid and describes its main functional and technical requirements. It determines the duties of TenneT as offshore transmission system operator, provides the sequence of the development of the sites and sets the timetable for commissioning of the connection for the sites, as illustrated by the table below.
SitesCommissioning15
Borssele I & II 31 August 2019
Borssele III, IV & V16 Q3 2020
Hollandse Kust (Zuid) I & II Q1 2021
Hollandse Kust (Zuid) III & IV Q1 2022
Hollandse Kust (Noord) Q1 2023

On the basis of the development framework, TenneT draws up a bi-yearly investment plan setting out the envisaged investments, performance targets, deadlines and plans for capacity expansion. The investment plan has to be approved by the Dutch regulator, ACM.
TenneT shall in principle be compensated for the costs of the offshore grid through the regulated transmission tariffs. However, to avoid a substantial increase in the transmission tariffs, TenneT is granted a direct subsidy as compensation for its costs incurred in developing the offshore grid.
5.3 Realisation Agreement and Connection & Transmission Agreement
The operator of the wind park shall enter into a realisation agreement and a connection & transmission agreement with TenneT. The realisation agreement sets out the terms and conditions regarding the development of the connection for the wind park, addressing aspects such as the basic design and technical specifications of the connection and the TenneT platform, as well as operational arrangements and the exchange of information between TenneT and the wind park developer. Pursuant to this agreement, TenneT is obliged to realise the connection on or before the date set in the development framework. After the realisation of the connection, the relationship between the wind park operator and TenneT will be governed by the connection and transmission agreement.
Pursuant to these agreements, the implications of a delay or unavailability of the connection or the offshore transmission system will be solely addressed in the Electricity Act 1998.
5.4 Compensation for delay and unavailability
The Electricity Act 1998 and the Ministerial Order Offshore Electricity Grid Compensation Rules set out the liability regime applicable to TenneT in case of a delay in the completion of the offshore grid or the unavailability of the offshore grid. Pursuant to this liability regime, the wind park may be compensated for postponed revenues and consequential damages (including, inter alia, costs of mitigation measures, hiring additional equipment and staffing – but excluding financing costs, which are deemed to be included in the postponed revenues).
Damages due to delayed completion of the grid

A delay in the construction of the offshore grid is deemed to occur when the completion of the connection of the wind park and the system between the wind park and the onshore transformer station exceeds the completion date set out in the development framework. To qualify for damages, the foundation of the wind park has to be in place and the wind park operator is required to demonstrate that the wind park would have been ready to start operations, had it not taken measures to mitigate damages. A delay in the construction of (part of) the offshore wind park shall therefore affect the compensation payable by TenneT.
Postponed revenues are calculated based on the assumption that missed subsidy revenues due to the delayed completion will be received at the end of the subsidy period (banking to year 16) and missed electricity sales will be realised at the end of the lifetime of the park. On the basis of a discount rate of 7%, the postponed revenues are calculated as follows:
  • [(SDE+ Subsidy Amount – SDE+ Subsidy Amount/2.95) + (SDE+ annual electricity price pursuant to the SDE Decree – SDE+ annual electricity price pursuant to the SDE Decree /3.87)] x electricity that could not be transported.

    Where:
    • The SDE+ Subsidy Amount is the base amount per kWh for which SDE+ subsidy has been granted pursuant to the SDE Decree minus the SDE+ electricity price applicable for that year pursuant to the SDE Decree.
    • The electricity that could not be transported is determined on the basis of the wind speed, and the electricity production profile of the wind park, while taking into account any interruptions in the production of electricity by the wind park due to delays, disruptions or maintenance, as well as any electricity that was transported through the grid. For this purpose a computation model will be set out in a ministerial order.

In this calculation missed electricity over a period of five days per year shall not be taken into account, since this period is deemed necessary for scheduled maintenance of the grid. By disregarding this period, wind park operators are encouraged to schedule their own maintenance as much as possible within the same period. The resulting damages will be increased with legal interest as of the occurrence of the damages.
Damages due to unavailability of the grid

In case of an interruption of transmission of electricity, the postponed revenues are calculated based on the assumption that missed subsidy revenues can be made up by production in later years. On the basis of the assumption that missed electricity production will be made up in a period of five years and a discount rate of 7%, the postponed revenues are calculated as follows:
  • [(SDE+ Subsidy Amount – SDE+ Subsidy Amount/1.4) + SDE+ annual electricity price pursuant to the SDE Decree] x electricity that could not be transported].

Missed electricity over a period of five days per year shall not be taken into account in the determination of postponed electricity sales and postponed subsidy revenues.
6. Decommissioning
Decommissioning shall take place in accordance with a decommissioning plan to be developed by the wind park operator. The Directorate General for Public Works and Water Management (Rijkswaterstaat), the competent authority in relation to the Water Act, is currently preparing guidelines for decommissioning.
Pursuant to the site decisions, decommissioning has to be started within two years after the operation of the wind park is discontinued and must be completed ultimately 30 years after the date on which the wind permit has become irrevocable. The wind park operator shall provide financial security for decommissioning in the amount of EUR 120,000 per MW, as of the start of the construction of the wind park. This amount shall be annually indexed (for the first 12 years resulting in an annual increase by 2%). The amount and index are subject to a periodic review by the Minister of Economic Affairs.
7. Relevant links
8. References
  • Offshore Windpark Egmond aan Zee (OWEZ) (108MW), Prinses Amaliawindpark (120 MW), Gemini windpark (600 MW), Luchterduinen windpark (129 MW)
  • Amounts are excluding costs in relation to the grid connection.
  • Site Borssele V shall be dedicated to innovation. The tender for this site will therefore differ from the other tenders. We expect this tender to open in October 2017.
  • Renewable electricity, green gas, heat and combined heat and power (CHP).
  • See section 4.
  • See section 2.7.
  • Not being a condition precedent for the subsidy decision.
  • The current National Water Plan (also referred to as the second National Water Plan or NWP2) covers the period 2016-2021 and is the successor of the National Water Plan that was published on 22 December 2009 in relation to the period 2009-2015.
  • Third party interests may, inter alia, relate to shipping routes and oil & gas extraction.
  • See section 2.3.
  • If the development and operation of the wind park does not require SDE+ subsidy, a different permitting procedure shall apply pursuant to the Offshore Wind Energy Act. This procedure is not addressed in this brochure.
  • For this purpose TenneT TSO has been appointed offshore transmission system operator.
  • With the exception of TenneT platform Beta that will connect parks on the sites Borssele III, IV and V.
  • With the exception of Borssele site III. For this site the maximum capacity is 360 MW.
  • The date for the connection of the sites Borssele I and II is final. The other deadlines are currently indicative.
  • In relation to the planning for Borssele site V. See note 3.

© CMS Legal 2017