German utility RWE has secured the concession for the 1 GW Thor offshore wind farm in Denmark, it said Dec. 1.
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The Danish Energy Agency had to draw lots to identify the winner of the tender to build the North Sea wind farm after multiple bidders offered the minimum price (DKK 0.1/MWh, 1.5 cents/MWh) and maximum capacity.
"As one of the global leading players in offshore wind, we are delighted to be awarded the Thor project -- Denmark's largest offshore wind farm to date," RWE's head of wind offshore Sven Utermoehlen said.
The wind farm is scheduled to reach full operation in 2027, RWE said.
In the coming months, RWE will prepare for the permit application and focus on soil investigations, it said.
Denmark's energy minister Dan Jorgensen said the strong interest in the tender at a "good price" was "enormously good green news that the wind turbine industry has been eager to bid".
The ministry said the concession winner would pay DKK 2.8 billion to the state.
"Thor thus becomes the first offshore wind farm in the world to be built with payment to the state," the ministry said adding that under the Danish support model the state either provides support for or receives payment depending on the price of electricity.
European electricity prices have tripled year-on-year amid a record rally for gas, but prices are forecast to ease towards 2027 as gas prices fall and more wind and solar come online, according to S&P Global Platts Analytics Five-Year forecast covering 2023-2027.
Subsidy-free projects may also benefit from Guarantees of Origin with Platts assessing EU wind 2025 GOs at Eur1.925/MWh on Nov. 30.
A $2.5 billion project
Bidders in the tender included Denmark's Orsted and Sweden's Vattenfall as well as SSE, Eneco and TotalEnergies in various consortia.
The concession is for 30 years with the option of a 5-year extension.
For the first time in Denmark, the tender includes the offshore grid connection, including the substation, landing cables and a high-voltage onshore substation as well as a flexible size of the park.
The project some 22 kilometers offshore Denmark's west coast must be connected to the grid by the end of 2027 with the grid connection window opening in January 2025, it said.
The Danish Energy Agency estimated the investment for the project including grid link around $2.5 billion.
Thor is the first of three offshore wind farms planned under Denmark's 2018 energy deal with wind already covering some 50% of Danish electricity. The next tender at Hesselo is currently suspended amid soft seabed issues with the capacity possibly shifting to Bornholm.
To meet net zero climate targets, Denmark plans two energy islands with an initially 5 GW offshore wind by 2032 in the North and Baltic Sea acting as hubs and power-to-x conversion centers starting in the early 2030s.
Vattenfall's 600 MW Kriegers Flak project in the Baltic Sea started this summer lifting Danish wind capacity to 7 GW.
RWE plans to triple its global offshore wind capacity to 8 GW by 2030.
In September, RWE was awarded two smaller German offshore project after a lottery after multiple bids were submitted at zero subsidies.