Industry divergence on costs and wind turbine sizing manifests itself in the first commercial floating wind tender

The AO5 Sud de la Bretagne tender has now concluded. This was the world’s first commercial floating offshore wind tender, marking a significant step in commercialising floating offshore wind technology, and highlighting the industry’s diverse approaches to costs and turbine sizing. 

The consortium of Germany’s BayWa and Belgium’s Elicio emerged victorious, with a bid of EUR 86.45/MWh to build the 270 MW Pennavel project. 

We’ve taken a look at what led to this victory – and what it means for the offshore wind industry and tenders going forwards: 

Price, robustness of the bid and turbine rating decided the winner 

The tender process underscored the importance of several criteria. All six candidates met the essential requirements related to social and territorial development, sustainability, and environmental investment, which acted as prerequisites for competition.  

The differentiating factors, however, were price (70%), the robustness of the contractual and financial arrangement (5%), the maximum number of turbines (2%) and optimisation of the sea area (2%). 

This highlights the need for governments to not only consider the weighting of criteria but to set high ceilings to ensure these parameters serve as genuine differentiators rather than mere entry requirements. 

The French government, whether intentionally or not, fuelled the ‘arms’ race 

Common to the winners of both AO5 and the previous round (AO4) is that their bids proposed the largest turbine ratings (23.8 MW and 24.5 MW, respectively – including power boosts). A caveat for AO5 is that the winner can reduce the turbine rating to 18.7 MW without forfeiting the contract.  

Many factors led to the decision to go with larger turbines. A key reason is that it allowed bidders to get a higher score in the tender. Despite the low weighting of 4% for criteria relating to turbine rating (namely, optimisation of the sea area and maximum number of turbines) these factors did not have a ceiling which allowed bidders to differentiate themselves by bidding with a larger turbine. 

While the low weighting suggests that the important role of turbine rating was not intentional, it will add fuel to the heated ‘arms’ race debate which spans beyond France – especially since we are seeing the maximum number of turbines play a role in other tenders as well. 

The question of bid prices 

Price remained a critical factor, representing 70% of the scoring. Interestingly, the lowest bid did not win the tender. Instead, the winning bid, which was the second lowest, was 15% below the average reference price and 38% lower than the ceiling.  

The French Energy Regulatory Commission (CRE) found the offers to be ‘optimistic’ and therefore investigated the bids’ deliverability. However, CRE concluded that the winning biddoes allow room for reconfiguration which helps mitigate potential risks.  

Subsequently, CRE recommended that future tenders should pay more attention to the robustness of the bids. Consequently, non-price criteria, especially relating to project deliverability, are likely to play a greater role in determining winners in future tenders. 

Divergent views on floating wind costs 

The AO5 tender revealed significant disparities in cost assumptions among the candidates, reflecting the nascency of the floating wind sector and the tightening of supply/demand balances across the supply chain which is driving up prices and causing uncertainty over the costs of offshore wind – both bottom-fixed and floating. 

The estimated figures for total investment varied by 45%, operating costs by 32%, and post-tax internal rate of return (IRR) by 31%.  

These differences underscore the industry’s divergent views on floating wind costs and highlight the challenges in establishing consistent pricing. 

Notable technological and environmental commitments 

Four out of six candidates opted for semi-submersible steel float technology, with the winning bid using semi-submersible concrete technology.  

The offers estimated that turbine supply and installation would account for 32% of CAPEX, while floaters and anchors would make up 33%.  

The tender design enabled several significant advancements in offshore wind sustainability. Candidates committed to limiting emissions during construction and operations, and high levels of recycling across blades, towers and foundations. These commitments show the industry’s ability to improve the sustainability of offshore wind in other tenders as well.  

Final thoughts 

The first commercial floating wind tender has set a precedent for the future of the industry, highlighting both opportunities and challenges. The outcomes demonstrate the importance of robust financial and contractual arrangements, the role of turbine sizing, and the need for clear and effective criteria.  

As the floating wind sector continues to evolve, these insights will be crucial in shaping future tenders and advancing the commercialisation of this promising technology. The AO5 tender marks a significant milestone as it enables the sector to answer many of the questions the tender raised and reduce divergence in assumptions for future tenders.  

Learn more 

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Søren Lassen

Head of Offshore Wind Research