Denmark will hold a lottery on December 1 to choose the winner of a competition to build the 1 gigawatt Thor offshore wind farm, which will be the largest in the country, after several offers were made with a minimum grant price close to zero , he said on Thursday.

The project is one of three large offshore wind farms that Denmark aims to build by 2030 as part of its plans to reduce carbon emissions to 70% from 1990 levels by 2030.

The Danish Energy Agency said it was inviting a number of bidders to participate in the raffle, after receiving several bids for the minimum price of 0.01 øre / kWh (0.001 Danish crowns) and the full capacity.

The tender is based on a so-called contract for difference (CfD) system, which means that the winner is guaranteed a minimum price for their electricity.

When the wholesale price of electricity exceeds the strike price of the CfD, which is close to zero in this case, the generator will reimburse additional cash to the government until a cap of 2.8 billion crowns. Danish ($ 423 million) is reached.

This is expected to happen within two to three years and thereafter the generator will only make money by selling electricity at market conditions, according to Danish wind pressure group WindDenmark.Credit: Danish Energy Agency

Growing demand for wind power, technological advancements and competition among turbine manufacturers have lowered the level of subsidies that governments pay to build projects. Some countries have even awarded tenders without price support. Read more

The Danish project has attracted the interest of traditional wind players like Orsted (ORSTED.CO) and companies such as the French oil major TotalEnergies, which has partnered with Spain’s Iberdrola (IBE.MC) for the sale at auction.

Other bidders include Sweden’s Vattenfall, a joint venture between Dutch energy company Eneco and Danish European Energy, as well as a joint bid from UK utility SSE and Thor OFW. The German RWE is also participating through a subsidiary.

Thor is expected to be connected to the grid between 2025 and 2027 and the total investment costs are estimated at 15.5 billion crowns.

The head of Siemens Gamesa warned on Wednesday that a decade-long race to reduce the cost of wind power generation could not continue, as it would reduce the financial strength of turbine producers to continue investing in new technologies. . Read more

($ 1 = 6.6287 Danish kroner)