Denmark Introduces Capability-Based Contracts for Difference for Offshore Wind Support
Denmark's upcoming offshore wind tender will implement a capability-based two-way Contracts for Difference (CfD) scheme, incorporating state financial support to mitigate risks faced by developers. The new framework addresses issues from a failed 2024 tender by providing compensation based on potential power generation rather than actual output. This approach aims to align the tender with market conditions and improve revenue predictability, while the European Commission assesses the scheme.
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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.
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