Big firms weigh in as France looks to revive offshore wind

While Britain and Germany have already built 8,200 MW and 6,400 MW of offshore wind capacity – enough to power millions of homes – France does not have a single turbine in the water

PARIS: A French wind power tender has attracted interest from a slew of international energy heavyweights, signalling that France’s offshore wind industry could finally be taking off after years of missteps.

While Britain and Germany have already built 8,200 and 6,400 megawatts (MW) of offshore wind capacity – enough to power millions of homes – France does not have a single turbine in the water.

In two previous French tenders, in 2012 and 2014, a bumper 3,000 MW of capacity worth 11 billion euros ($12.4 billion) was awarded, but the projects have not materialised because of public opposition and contract wrangles.

Now, France is making a new start, auctioning a modest 600 MW in the northern town of Dunkirk in a tender it hopes will finally exploit some of the best offshore wind potential in Europe.

So far, investors appear to like the prospects.

Ten interested companies or consortia, including some of Europe’s leading offshore wind developers, have been shortlisted to submit bids by a March 15 deadline, although one has pulled out, according to three industry sources.

However, despite the investor interest, strong public opposition to wind farms in France that has constrained the development of the industry for years remains a major obstacle and could yet derail the planned schemes.

The shortlist includes French power giants EDF, in partnership with Germany’s Innogy and Canada’s Enbridge; and Engie with Portugal’s EDPR.

Among the foreign bidders are Norwegian oil major Equinor; Royal Dutch Shell with France’s Quadran and Belgium’s DEME; Swedish utility Vattenfall with French state bank CDC and German wind developer WPD; and Dutch utility Eneco in a consortium including Canada’s Boralex.

“This tender will set the tone for the future of offshore wind in France,” said Tako Keja, director of Moulins de Flandre, the Shell-Quadran-DEME consortium.

Those six parties have either made public their interest, or confirmed to Reuters that they would bid.

Belgian firm Elicio, Belgian-French consortium ParkWind-Valeco and Belgian-Danish owned InControl will also take part in the tender, according to the industry sources. Dunkirk is close to Belgium, which already has 1,200 MW offshore capacity.

Spain’s Iberdrola was also shortlisted but has since withdrawn, but Denmark’s Orsted – Europe’s top offshore wind developer – was in talks to join one of the consortia, one source said.

Iberdrola and Orsted declined to comment, as did the French energy regulator CRE, which is running the tender.

RENEWABLES LAGGARD

France has one of Europe’s biggest coastlines as well as good wind speeds, with about 40,000 square km of viable wind farm area on its Atlantic coast alone, European Environment Agency data shows.

But with 75 percent of its electricity produced by nuclear, France has long been a laggard in renewable energy rollout and lacks big wind energy champions like Denmark’s Vestas or German-Spanish firm Siemens Gamesa.

When the previous socialist government finally gave the go-ahead for offshore wind, it not only wanted to build turbines but thought it could use the tenders to kickstart an offshore wind export industry.

The criteria of the 2012 and 2014 tenders favoured French-based manufacturing of turbines, and the winning bids, awarded at prices way above market levels, duly selected turbines made by French groups Areva and Alstom.

But seven years, later not a single one has been built in France as the projects have been blocked by public opposition, authorities have cut planned subsidies for budget reasons and Areva and Alstom’s wind units have both been bought by foreign firms – Siemens Gamesa and GE respectively.

Trying to move on from the two first tenders’ problems, French President Emmanuel Macron’s draft long-term energy plan, announced last month, targets relatively modest offshore wind capacity of 2,400 MW by 2023 and about 5,000 MW by 2028.

That is well below earlier targets and half what industry lobby group FEE recommended, but the government hopes that by creating a level playing field and focusing on price, it will be third time lucky.

‘YELLOW VEST’ PROTESTS

The criteria of the new Dunkirk tender, which have not been made public, do not require French-made turbines, according to two industry sources involved in the bids, with the overriding emphasis placed on pricing.

Two sources close to the bids said financial criteria will have an 80 percent weighting, of which 70 percent is purely about price and 10 percent based on the “robustness” of the offers.

In initial talks with prospective bidders the state had imposed a 60 to 100 euro per megawatt hour (MWh) range in an effort to balance a competitive price with the need to invite serious bidders.

In the final version it dropped that requirement, so consortia can bid as low as they want, one source said.

The 10 percent “robustness” criteria evaluates to what extent the French state can be certain that what is proposed will effectively be executed on schedule and within budget.

The remaining 20 percent of the bid weighting is based on environmental and land use criteria, which will force developers to optimise turbine size and placement so as to get maximum power production with minimal environmental impact.

The CRE regulator is set to recommend a winning bidder by mid April.

If the government accepts the recommendation, the tender could be awarded before summer, if the “yellow vest” protest movement that has rocked the country in recent months does not perturb the process.

“With Macron’s reform plans shaken by the yellow vests, he may be wary of announcing expensive renewable energy projects,” an official at one of the consortia said.

Source: reuters