
Denmark's latest round of offshore wind auctions fails: No bids received
Denmark’s recent 3 GW offshore wind auction has ended in disappointment, with no bids submitted for any of the three proposed sites. This marks a significant setback for Denmark’s energy transition and Europe’s broader efforts toward energy security and electrification. The failure to attract bidders has been largely attributed to flaws in Denmark’s auction design, including its uncapped negative bidding system, which has discouraged developers.
The auction was the largest in Denmark's history, offering three offshore wind sites, each with a 1 GW capacity, and the possibility of developers overbuilding by another 1 GW. However, the auction results were stark—no developer expressed interest in any of the areas.
WindEurope, the European wind energy trade association, expressed disappointment, noting that the failure was “sadly not surprising.” The association highlighted key issues with Denmark’s auction system, such as the lack of state support or revenue stabilisation models, unlike those in other European countries such as the UK, Poland, and the Netherlands. The absence of mechanisms like Contracts for Difference (CfDs) leaves developers bearing all the financial risks. Additionally, the costs of grid connections are also placed on the developers, further disincentivizing participation.
Giles Dickson, CEO of WindEurope, emphasized the need for immediate reform, saying, “Uncapped negative bidding is not a good system. It raises costs and risk. The Danish Government has to change their auction design.” The current setup, combined with rising inflation and commodity prices, along with higher interest rates, has made offshore wind development more economically challenging.
Denmark is a pioneer in offshore wind, being the birthplace of the world’s first offshore wind farm in 1991. The country currently generates 24% of its electricity demand from offshore wind, with wind energy (both onshore and offshore) meeting 55% of the total demand. The European Union has ambitious offshore wind goals, aiming to increase its offshore capacity from 20 GW today to at least 88 GW by 2030. Denmark, as part of the North Seas Energy Cooperation, has set a target of 7.7 GW by 2030 and 35 GW by 2050.
The failure of the auction is particularly concerning as Denmark is already facing challenges in meeting its electricity demand, with slower growth in the uptake of renewable electricity from mobility, heating, and hydrogen sectors. For offshore wind developers, this has created uncertainty about the future price they can secure for the electricity produced.
WindEurope has called for Denmark’s government to act swiftly and retender the volumes not awarded in this auction round, which is scheduled to take place in April 2025. The government must also reconsider the auction design to avoid further setbacks and ensure that Denmark maintains its position as a leader in the offshore wind market. Failure to do so risks hindering the country’s green electricity export and renewable hydrogen production potential, weakening Denmark’s energy security and increasing dependence on fossil energy imports from outside Europe.
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