By letter of 22 July the Minister of Economic Affairs has updated parliament on the cost of the offshore grid and on the expected cost savings as a result of the appointment of the national grid operator TenneT as the offshore grid operator.

Since the five designated tender areas are now closer to shore, TenneT has updated its cost projections for the offshore grid for the period 2019-2023. According to the updated projections the total cost of the offshore grid, for an amortization period of 20 years, are estimated to be EUR 4 billion (of which EUR 2 billion investment cost). This equals a cost in the amount of EUR 1.5 cent/kWh, which confirms cost projections in earlier studies and means that TenneT's appointment as offshore grid operator ensures a 40% cost reduction for the connection of the offshore wind parks and a 10% overall cost saving for offshore wind energy. This 10% overall cost saving consists of cost savings for TenneT due to  lower investment cost, less financing charges and lower maintenance cost as a result of synergy benefits as well as cost savings for the wind parks due to the higher availability of the connection of the parks to the offshore grid.

The investment cost for the offshore grid will be set out by TenneT in an investment plan that will elaborate on the framework for the development of the offshore grid that will be drawn up by the Minister of Economic Affairs (the so-called 'scenario') pursuant to the new gas and electricity bill (STROOM). The scenario will provide important technical requirements and prerequisites for the offshore grid, such as the choice for the 66kVcable and the maximum 380 MW capacity per site. For more information on the scenario, see our newsflash on STROOM . Operational arrangements between TenneT and the wind park operator will be set out in the connection and transmission agreement.

The offshore grid will be paid for by a direct subsidy to TenneT, which is funded by the renewable energy budget. TenneT's subsidy will thus not result in an increased transportation tariff. This subsidy will be worked out in detail and shall be submitted to the European Commission for approval under state aid regulation.