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Under the Energy Agreement for Sustainable Growth, the Dutch government has set a target of 14% of all energy to be generated Dutch recipe for from renewable sources by 2020, rising to 16% by 2023. is central to achieving that and, as a country, we are determined to make success in the Netherlands a leading force in the sector. Under our Government’s plan, there should be 4500 MW of offshore wind plant operating in the Dutch by 2023, up from the 1000 MW offshore wind currently operating or under construction. Specifically, the plan will see 3500 MW of new capacity installed across two wind farm zones The Dutch Government’s offshore wind energy (Borssele and Hollandse Kust), broken down into five 700 MW tender rounds. Critically, the plan programme is making significant waves in the actively fosters a culture of innovation and aims energy sector, after DONG Energy bid a record-low for offshore wind costs to fall by 40% (compared to 2014). Already, that plan is being seen to work. price for the contract to build and operate the first The cost of building and operating the two two projects offered in the country’s five-year tender projects offered up for tender in the first round of programme. That could only happen because of the the programme is expected to be €2.7 billion cheaper than previously estimated. These two 350 steps taken by the State in designing an offshore MW projects are located more than 22 km off the coast of the province of at Sites I and II of wind plan and tender system that alleviates risk for the Borssele Offshore Wind Farm Zone. the industry, as Ruud de Bruijne, Project Manager, Overall, there were 38 bids in the public tender to Offshore Wind Energy, Netherlands Enterprise secure the 30-year permit and to build and operate the wind farms along with the associated Agency (RVO.nl) explains. 15-year “SDE+ subsidy”. Danish offshore wind developer, DONG Energy Borssele 1 B.V., submitted the winning bid with an average of 7.27 euro cent per kilowatt hour. This is 5.1 eurocent less than 12.4 eurocent per kilowatt hour maximum price cap set. There has never been an offshore wind farm built at such low cost in the

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Ruud de Bruijne world before. Up to now the lowest auction prices fall incrementally with each round in for all projects will be lower than originally price for constructing and operating a wind line with our goal to reduce costs. For anticipated, further driving down the farm was 10.3 eurocent per kilowatt hour, Borssele Sites III and IV, the price cap is levelised cost of electricity from offshore for a wind farm off the coast of Denmark. 11.975 eurocent per kilowatt hour. For next wind. year’s Hollandse Kust (zuid) tender the Our system, in which companies have to Recipe for success price drops to 10.750 eurocent per kilowatt compete with each other while the hour, followed by 10.325 and 10.0 eurocent The question many around the world are government regulates all conditions for per kilowatt hour for the tenders in 2018 asking is how have we achieved this and building the wind farm, has therefore enabled DONG to bid a record low price for and 2018 respectively (See table below). proved to be successful and this reduction offshore wind? There are two key factors to of cost represents a major breakthrough in Again, based on our experience in the first the success. Firstly, the Netherlands is the transition to more sustainable energy. round, we are optimistic that the final cost blessed with some of the most ideal We fully expect the costs to come down further as we move forward with further tenders. Timetable for Dutch offshore wind farm tenders 2015-2019 The second tender round in the Dutch Project Capacity Year Wind Farm Zone Price cap (Eurocent/kWh) programme - seeking bids to build and (MW)1 operate Borssele Wind Farm Sites III and IV Borssele (WFS I – closed on 29th September 2016, with the 2015 - 2016 700 12.400 and II) final winners expected to be announced by Borssele (WFS III the end of the year. Together, these total 2016 680 11.975 680 MW (a further 20 MW for innovation and IV) projects at Borssele Site IV will also be Borssele Innovation 2017 20 11.975 offered for tender in the last quarter of (WFS V) 2017). Meantime, we are already preparing all the necessary documentation and site 2017 Hollandse Kust Zuid 700 10.750 surveys for companies hoping to bid next year for the first two projects in the 2018 Hollandse Kust Zuid 700 10.325 Hollandse Kust (zuid) region. These will be 350 MW each. Finally, two further tender Hollandse Kust 2019 700 10.000 rounds are planned in 2018 and 2019, Noord offering up a further 700 MW each, to 1 Depending on the type of turbine, an operator is allowed to install 342-380 MW per site, complete the goals of our roadmap to 4500 but this presentation assumes a fixed capacity of 350 MW for the sake of simplicity. MW of offshore wind. Source: Netherlands Enterprise Agency, RVO.nl As with our first tender round, price caps are in place for each planned tender. These Table: Price caps in the annual tenders for the Dutch offshore wind programme 2015-2019

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transmission system operator, takes care of “Firstly, the Netherlands is blessed with some the offshore grid connections. of the most ideal conditions for offshore wind The feedback we have received following the first tender has been positive. We now development in the world” have a firm idea of the key success factors and of the lessons to be implemented for conditions for offshore wind development co-developer of offshore wind farms. the future. While the Wind Farm Site in the world: An excellent wind resource, Specifically it is responsible for: Decisions the State produces for each relatively shallow waters and good seabed • Site selection project tender define the site specific conditions (for both installation and requirements all companies must abide by, maintenance) in the North Sea, well- • Consenting and thus offer a certain degree of equipped ports and a strong existing • Financial support mechanism - SDE+ standardisation and a level playing field for offshore industry and supply chain. operating grant all potential bidders, we have built in a great Secondly, to actively help drive down costs, deal of flexibility for developers too i.e. size we have introduced a stable market • Site investigations and environmental and rating of turbine, foundation choice, framework under which SDE+ subsidies, impact assessments etc. Along with the absence of red tape project consents and grid connection are associated with power projects elsewhere • HV Substations, grid connections and streamlined. Together, these factors in the world, this allows the developer to associated infrastructure - State TSO enabled DONG and others to develop optimise project designs. TenneT takes on this role strong plans and submit highly competitive This is further reinforced by the high quality This whole ‘package’ is put to the market bids whereby offshore wind power is site investigations produced. The State via the subsidy and permit tender, giving produced as efficiently as possible and appoints industry leading companies to companies clarity and transparency to cheaper than ever before. conduct them and certify the final results enable them to prepare bids as effectively reports. Industry feedback has confirmed The Dutch State has effectively removed as possible. In the tenders, the company that the data made available is more than the development phase, pre-construction, submitting the lowest bid is awarded a companies would traditionally expect at this burden (in terms of time, cost and risk) from permit to build and operate the wind farm stage, enabling them to produce better private companies, conducting all the and granted the associated subsidy. informed and thus cheaper designs. necessary site surveys and environmental Previously, companies had to receive impact assessments and so forth itself, as consent before they could compete for the Meantime, the relatively short time between well as responsibility for grid connection. grant and had to install the export cables to when the grant and permit are awarded and Essentially, this makes the Dutch State a shore themselves. Now TenneT, the Dutch construction start means developers can

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negotiate competitive prices with suppliers keys to successfully driving down the cost firmly underway and progressing well at the - all projects are expected to be operating of offshore wind while boosting overall Netherlands Enterprise Agency. The within five years of the contract being efficiency and productivity. Hollandse Kust (zuid) Wind Farm Zone is awarded. It is also worth noting that, in Nonetheless, going forward, all bidders are located offshore from the province of offering two 350 MW projects located close asked to produce an action plan detailing Zuid-Holland, covering an area of 365 to each other in each tender, there is a how their project plans, if accepted, will square kilometres. Four 350 MW wind good balance between: contribute to the local and regional farms are planned for the zone. The full 1. The potential benefits from economy of economy e.g. in terms of job creation, package for Hollandse Kust (zuid) Sites I scale (capitalised on by DONG Energy, environmental protection. This plan though and II will be made available before the end for example, in its winning Borssele I and has no formal role in the tender procedure of this year, with the tender itself planned II bids); and and thus there are no minimum or specific for Q3 2017. The data package of WFS III requirements attached to the request to and IV meanwhile will be available in Q1 2. Ensuring the market is fully competitive produce one. and open to smaller companies. 2017 (the tender for these sites in planned Finally, we are also implementing lessons Q3 2018). This is subject to approval by the Lessons learned drive change learned regarding site investigations. While Government of the extension of the Wind Following the tender for Borssele I and II, the industry feedback on our data has been Farm Zone to 10 NM off the coast. we have made some changes to the tender highly positive, we are expanding the system for Sites III and IV in light of lessons Scope of Work for the geotechnical learned. surveys, starting with Hollandse Kust (zuid). Our purpose in doing so is to limit the Ruud de Bruijne is Project Manager, In recent years, there has been a growing “second phase” geotechnical survey work Offshore Wind Energy, Netherlands tendency globally for state-led power needed to be executed by the winner of the Enterprise Agency (RVO.nl). Netherlands project auctions to include minimum local forthcoming tenders. Enterprise Agency is part of the Ministry content mandates. The Government of the of Economic Affairs and works at the Overall, these improvements will hopefully Netherlands has, however, rejected calls for instigation of Dutch ministries and the take the whole package of data we supply a similar local content requirement to be European Union. bidders to a significantly higher standard included in its offshore wind programme. and with that help them innovate further to For further information please go to We strongly believe that developers should drive down offshore wind costs. be free to choose their suppliers and thus www.rvo.nl our system provides them with as much Work on preparing the data package for the http://offshorewind.rvo.nl flexibility as possible. This is one of the Hollandse Kust (zuid) tender rounds is

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