Belgium confirms two-sided contract for difference auctions for 3.5GW offshore wind
Belgium confirms two-sided contract for difference auctions for 3.5GW offshore wind | Windpower Monthly
Belgian energy minister Tinne van de Straeten said on 2 July that the government is committing to the two-sided model as it seeks to auction three offshore wind sites in the 3.5GW Princess Elizabeth zone in the Belgian North Sea.
Belgium previously used a one-sided CfD model based on a minimum levelised cost of electricity (LCoE). In this model, the government commits to supporting the offshore wind farm in question if market prices dipped below the agreed price, so developers do not lose money.
A two-sided CfD is balanced between the energy producer and the state, where the state guarantees the minimum strike price as before, but with the additional caveat that, should market prices rise above the agreed price, the producer pays the state the difference.
Belgium is currently developing an energy island project with the country’s transmission systems operator, Elia, at the Prince Elizabeth zone. It aims to use the future energy island for the connection of planned offshore wind farms in the area and also as part of a North Sea interconnector project.
“We [will] give Belgian industry direct access to the offshore wind farms. In this way we strengthen the greening of the industry. Through power purchase agreements (PPAs) they can conclude long-term contracts with electricity producers,” van de Straeten said.
Related Knowledge Center: Offshore wind energy
Over the next decade, U.S. offshore wind power is expected to grow from a single 30-megawatt wind farm off Rhode Island to more than 2,000 MW of capacity along the Atlantic Seaboard. There are contracts for wind power off the coasts of Massachusetts, Connecticut, New York, Maryland, New Jersey, Rhode Island, and Virginia.
The National Renewable Energy Laboratory has estimated the United States has over 4,000 gigawatts (GW) of offshore wind potential, enough to power the country four times over.
The growth in part being spurred by state solicitations, including in New York, where then-Gov. Andrew Cuomo (D) set a commitment of 9,000 MW of offshore wind by 2035, and in Connecticut, where in June 2021, Gov. Ned Lamont (D) signed legislation authorizing the construction of 2,000 MW of offshore wind by 2030.
The offshore development is also being driven by an investment tax credit set to end in December 2019 and is equal to 12 percent of expenditures. U.S. Sens. Susan Collins (R-Maine) and Tom Carper (D-Del.) have introduced a bill to extend the tax credit for up to eight years.
The Interior Department has held eight competitive lease sales that resulted in 15 offshore wind leases over 1.7 million acres that has the potential for 21 GW of capacity. In February 2022, the Bureau of Ocean Energy Management completed a bidding process that realized $4.37 billion for 488,000 acres across six lease areas in federal waters off New York and New Jersey.
Projects have also been proposed off the Southeast coast, off California and Hawaii, and for the Great Lakes.