Do commercial terms for upcoming offshore wind auctions reflect the changed market conditions in 2024?

Several offshore wind markets were just reaching merchant price levels, but due to recent development seen in 2023 with high inflation rates and interest rates, we are not at merchant price levels anymore, which most current offshore wind auctions designs in 2024 have been centered around.

Let's look at developments so far in 2024:

• In Q1 2024, six auctions were finalized across Estonia, Japan, Norway and the US, making it a promising start into the new year. In total, 4.4 GW of new offshore wind leases and 7.4 GW of support contracts was awarded.
• However, the Estonian lease auction for the Saare 1 area closed without any bids. Norway's Utsira Nord floating auction was postponed to ~2025, and most recently the second Lithuanian auction was claimed unsuccessful with only one bidder.
• Nine markets initiated auctions in Q1 2024 and 14 markets across Europe, the Americas and APAC currently have ongoing auctions, in various stages. In Q2 2024, over 14 GW of capacity could be awarded across France, the Netherlands, the US, Taiwan and the UK.
• Earlier this week the anticipated Danish auctions of at least 6 GW were kicked-off, which come with steep delay penalties, state co-ownership, and, for the North Sea sites, securing a market and offtake for integration or export of overplanting capacity opportunities.

How the market will respond to the Danish auction framework will depend on how the complexity and uncertainties are managed combined with the bidding appetite. Bidding in Northern Europe has never been more complex.

Get an overview of coming offshore wind auctions worldwide in 2024 and keep track of trends and developments with Aegir Insights’ Auction Intelligence products.

Monthly updated Auction Database: Stay on top of all auctions across global markets with Aegir Insights' Auction Database, updated on a monthly basis.

Offshore Wind Lease Price Benchmark: Overview and comparison of monetary bids paid for  seabed leases globally to understand market entry costs.

Quarterly Auction Intelligence report: Visual overviews of coming offshore wind auctions across the globe and deep dives into recent auction developments in 2024. Subscribing clients can access our recently released Q1 Quarterly Auction Intelligence report on the Aegir Insights platform

Aegir insights commercial tool kit off decision-making in the offshore wind sector

Aegir Insights provides developers and governments with the sector’s most powerful commercial tool kit for auction and competitor simulation. To learn more about Aegir Insights auction intelligence and simulation tools reach out to VP Business Development Matthew Delany.