As part of the Energy Agreement from 2018 the parties decided to establish three offshore wind farms in Danish waters, before 2030. The first of these wind farms is Thor Offshore Wind Farm, with a capacity between 800 and 1000 MW it will be the largest offshore wind farm in Denmark.

An important change has been made in the tender for Thor, namely a new design for the remunerationscheme. The remuneration scheme is a Contract-for-Difference mechanism, where the reference price will be determined annually as the average spot price from the previous year, as opposed to the ‘traditional’ hourly based Contract-for-Difference that is in place for other offshore wind farms in Denmark. This increases the short term risk for the concession owner in terms of price fluctuations. The rationale behind the change insupport scheme is that it should incentivise the concession owner to maximise the market value of production rather than simply maximise output. The rationale is described in more detail below.

In the following we go through the procedure and process of the Thor tender and discuss the new support scheme in more detail.

Download the report here.