Danish Government Postpones Tender for North Sea Energy Island, Current Concept Found to Be Too Expensive

June 28, 2023, by Adrijana Buljan

The Danish government has postponed the decision to initiate the tender for the artificial energy island it plans to build in the North Sea. The reason behind the move is that the current concept for the North Sea Energy Island is too expensive, so the government wants to look into other concepts.

The government said that after “the balance sheet has been settled” for the current concept, it proved to be economically challenging. The Danish Energy Agency (DEA) estimates that the state costs for the currently considered development are in excess of DKK 50 billion (approximately EUR 6.7 billion).

The project is therefore far from being profitable, which is a condition for it to move forward under the political agreements that were signed earlier, according to the Danish Ministry of Climate, Energy and Utilities.

“In its current form, the costs to the state are too great and the risks too many”, the ministry states in a press release from 28 June.

The government noted that it was sticking to its ambition to realise the energy island and that it was pushing back the decision to initiate the tender so it could thoroughly analyse several options for a better and cheaper North Sea Energy island concept.

The decision on how to realise the project in an optimal way is therefore postponed until later in the year, and the tender material will therefore not be published, as initially planned, before the summer holidays, the ministry says.

“We must utilize the large offshore wind potential in the North Sea, and the government is sticking to its ambition to realize an energy island in the North Sea. The project is important for both Denmark’s and Europe’s green transition as well as for the security of supply. When we plan projects of that magnitude, we must of course also ensure that we choose the most responsible solutions. We are now taking a little longer to do that so that we can make a decision later in the year”, said Lars Aagaard, Danish Minister of Climate, Energy and Utilities.

The tender for the artificial energy island in the North Sea was already postponed last year by the Danish Energy Agency (DEA), which, at the time, pushed back the start date for the tender by up to twelve months, expecting it to be launched in September 2023.

However, in October last year, the Danish government and political parties signed a new agreement that set out requirements that would be part of the tender, enabling the procurement to be opened in the first half of this year.

The Danish government, which plans to own at least 50.1 per cent of the North Sea Energy Island, plans for the project to be ready by 2033 to accommodate 3 GW of offshore wind and increase that to at least 10 GW by 2040.

The artificial island will be constructed 80 kilometres off the peninsula of Jutland.