Last Friday, the Dutch Minister of Economic Affairs published two important decrees related to the generation of renewable power at sea. Several conditions of the offshore subsidy tenders that will be held towards the end of this year are clarified in these decrees. Below is a summary of the most important of these conditions.
The nameplate capacity of the wind farms will be at least 351 MW per plot, reduced by the number of MW of the wind turbine with the lowest capacity in the wind farm. The nameplate capacity shall not exceed 380 MW.
The tender will close on March 31, 2016, 17:00 hours. However, in case the decree enters into force after March 3, 2016, the tender will close on the 5th Thursday after the date on which it enters into force, at 17:00 hours.
The equity of the party requesting the subsidy, as appearing from its annual accounts published no more then three calendar years previously, shall be no less then 10% of the total investment costs of the wind farm. In the event the equity of the party requesting the subsidy shall be less then 20% of the investment in wind farm, the request will have to be accompanied by a letter of intent by a financial institution financing the difference between 20% and the equity.
Maximum subsidy amount is EUR 2,500,000,000 per plot. The tender amount shall not exceed EUR 0.124 per kWh.
The subsidy will be granted under the conditions precedent that a realization agreement will be entered into within 2 weeks and that a bank guarantee will be provided. Attached to the decree are a draft realization agreement and the precedent bank guarantee. The realization agreement states that a bank guarantee of EUR 10,000,000 will have to be provided to the Dutch state by a bank holding residence in the European Union, within 4 weeks. It also states that a second bank guarantee in an amount of EUR 35,000,000 will have to be provided within 12 months. Commissioning the wind farm late will lead to the forfeiture of a penalty of EUR 3,500,000 per month. Being late in the provision of the second bank guarantee will lead to a penalty of EUR 10,000,000. Once a subsidy has been granted, it may be withdrawn at the request of the party receiving the subsidy, but such a withdrawal will also lead to a forfeiture of a penalty of EUR 10,000,000. The precedent bank guarantee is an abstract first demand guarantee.
The subsidy will be granted for a 15 year period. The wind farm must be commissioned by the later of (i) 5 years as from the date the subsidy is granted, and (ii) 5 years as of the date on which the plot decision has become irrevocable.
The base electricity price shall be equal to EUR 0.029 per kWh, the maximum number of full load hours shall be equal to the net P50 value of the full load hours stated in the subsidiary request.
To determine the corrections for the advances for 2016, the average electricity price will be used in the period as from May 1, 2014 up to and including April 30, 2015. The corrections on the tender amount for the advance payment for 2016 will be determined in the following manner:
- EUR 0.037681 per kWh for the electricity price; and
- EUR 0 for the value of the guarantees of origin.