European Commission Nods to Thor CfD Scheme

The European Commission has approved, under EU State aid rules, Danish support for the Thor offshore wind farm project.

Denmark notified the Commission of an aid measure, with a total maximum budget of DKK 6,5 billion (approximately EUR 870 million), to support the design, construction, and operation of the Thor offshore wind farm in the Danish North Sea.

The aid will be awarded through a competitive tender and will take the form of a two-way contract-for-difference premium for the duration of 20 years. The premium will be paid on top of the market price for the electricity produced.

The Commission assessed the measure under EU State aid rules, in particular the 2014 Guidelines on State aid for environmental protection and energy.

The Commission found that the aid is necessary and has an incentive effect, as the Thor offshore wind project would not take place in the absence of the public support. Furthermore, the aid is proportionate and limited to the minimum necessary, as the level of aid will be set through a competitive auction.

Finally, the Commission found that the positive effects of the measure, in particular the positive environmental effects, outweigh any possible negative effects in terms of distortions to competition, in particular, since the selection of the beneficiary and the award of the aid will be carried out through a competitive bidding process.

On this basis, the Commission concluded that the measure is in line with EU State aid rules, as it will foster the development of renewable energy production from offshore wind technologies in Denmark and reduce greenhouse gas emissions, in line with the European Green Deal, and without unduly distorting competition.

European Commission’s Executive Vice-President, Margrethe Vestager, in charge of competition policy, said: ”This Danish measure is a very good example of how Member States can provide incentives to companies to take part and invest in green energy projects, in line with EU State aid rules. The Thor offshore wind farm project will contribute to achieving the EU’s ambitious energy and climate targets set out in the Green Deal, without unduly distorting competition in the Single Market.”

The Thor offshore wind farm will have a capacity of between 800 MW and 1,000 MW. The offshore wind farm must be fully built and connected to the grid by 31 December 2027.

The Danish Energy Agency has pre-qualified a total of six consortia and companies to participate in the tender for the Thor offshore wind farm.

These include Ørsted; Vattenfall; a consortium of Total and Iberdrola; Thor Wind Farm I/S, owned by RWE Wind Holding A/S and RWE Offshore Wind A/S; a joint venture of SSE Renewables Offshore Windfarm Holdings Limited and Thor OFW K/S, which is owned by Copenhagen Infrastructure IV Thor OFW ApS and Andel Holding A/S; and Swan Wind P/S, a joint venture of Eneco Wind B.V. and European Energy A/S.