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Denmark plans to introduce a capability-based two-way Contracts for Difference (CfD) for its 2.8GW offshore wind tender, aiming to support developers after a failed 2024 auction. The new scheme includes state financial support and adjusts penalties, project volumes, and aligns with market conditions.

Unlike traditional CfDs linked to actual generation, the capability-based CfD compensates based on potential output, reducing revenue loss from curtailments. This design reflects Denmark's control over offshore wind infrastructure and aims to enhance project bankability amidst market volatility. The European Commission is assessing the proposed scheme, which remains largely untested.