Offshore Wind Auctions: Challenges & Resolutions

The offshore wind industry has been going through some challenging times in the recent past and there is significant uncertainty with respect to cost, supply chain deliverability and commercial terms. Nevertheless, the industry is poised for significant increases in capacity, competition, and investment with improved technology.  

The rights to development of an offshore wind park are auctioned by national regulators and comprise both price (subsidy or payment) and non-price criteria. Still, an offshore wind auction strategy is more than bidding optimization. It is a long-term strategy condensed into a bid – with major challenges to consider and resolve. 

Key challenges include cost management and supply chain resilience to ensure project profitability. It includes the intensifying competition and evolving business models, ranging from hydrogen and other green fuels production to thermal, electrical, or chemical energy storage. This necessitates developers to navigate uncertainties surrounding economics, subsidies, and infrastructure availability at the time of bidding. 

Moreover, the emergence of non-price auction criteria, such as environmental sustainability and innovation, urges developers to adopt alternative approaches.  

In this dynamic landscape, success hinges on developing creative and robust strategies that go beyond conventional bidding tactics. Furthermore, a comprehensive quantitative probabilistic evaluation to identify the best strategies and to understand how to improve them further. This will allow companies to embrace long-term vision, adaptability, and innovation.