Vattenfall Wins Danish Wind Project

By Erik Matzen and Nikolaj Skydsgaard

Swedish utility Vattenfall has won a tender to build Denmark's biggest offshore wind farm, but still faces the potential cancellation of a separate wind project in the country, the Danish energy ministry said on Wednesday.

Vattenfall won the 600 megawatt Kriegers Flak wind farm tender with a bid of 49.9 euros per megawatt hour, following its victory in September for a 350 megawatt near-shore wind farm off the western coast of Denmark.

Denmark's minority government, however, said in September it intended to cancel the near-shore project because the cost of renewable energy subsidies have soared due to low power market prices.

Offshore wind power is among the most expensive kind of energy and needs government subsidies, although recent bids from industry leaders suggest it may soon be able to compete with other sources of energy.

Vattenfall's bid for Kriegers Flak was almost 60 percent below a limit agreed by a coalition of political parties in 2012.

"And our winning bid for the near-shore was also considerably below the price limit," country manager, Ole Nielsen, said in a statement.

"This means, that Denmark can realize two wind farm projects ... for the price of one," he said, adding he remained confident the Danish parliament would back both projects.

Energy Minister Lars Lilleholt said the Kriegers Flak project had a number of advantages, but was adamant about cancelling the near-shore project, even though a majority in parliament is in favour of it.

"State aid for Kriegers Flak is far less than expected in the Energy Agreement, in sharp contrast to near-shore wind turbines," he said.

Lilleholt told Reuters an agreement on a new government subsidy scheme, and a decision on the near-shore project, could be reached in negotiations during the weekend.

Vattenfall expects to invest around 1.3 billion euros in the Kriegers Flak project, which had DONG Energy, E.ON and Statoil as prequalified bidders.

Located south of Sweden in the Baltic Sea, Kriegers Flak will provide enough energy to power a fifth of Danish homes, Vattenfall said in a statement.