December 22, 2017 / 12:23 PM / 3 months ago

Orsted skips zero subsidy Dutch wind auction, eyes Massachusetts instead

* Says economics of Dutch tender don’t add up

* Says Massachusetts tender more attractive

* New U.S. tax bill will have some impact on wind investment

By Stine Jacobsen

COPENHAGEN, Dec 22 (Reuters) - Orsted, the world’s largest developer of offshore wind, did not bid in the Netherlands’ zero-subsidy tender this week, its chief strategy officer told Reuters on Friday.

Results of the world’s first ever “zero subsidy” wind power on Thursday showed several companies had tendered bids, the Dutch Ministry of Economic Affairs said.

Sweden’s Vattenfall and Norway’s Statoil said they had taken part in the tender, where only bids that require no state support were accepted.

Orsted instead said this week it had put in a bid with partner Eversource to build Massachusetts’ first offshore wind farm.

“We take a global portfolio view... We have to select where we are playing, so we chose Massachusetts,” said Martin Neubert, Orsted’s chief strategy officer.

The Dutch tender follows strong demand at wind farm auctions in Germany where Orsted and EnBW submitted unprecedented bids with no subsidies on top of the wholesale electricity price.

Orsted had decided not to make another zero-subsidy bid in the Netherlands as it saw the project as less attractive than the German one, Neubert said.

The latter offered better wind resources, a longer project lifespan and better timing, he said.

He noted, for example, that the German project’s 2024 commissioning date would allow it to use the next generation of megaturbines, which will bring down costs, while they will not be ready in time for the 2021 Dutch project.

“We could not see that the economics for the Dutch tender added up unless you are speculating in power prices,” he said.

The wind industry has seen increased competition in the mature Europe market including from oil majors such as Statoil looking to diversify.

In response, Orsted has looked overseas to the United States and Asian markets such as Taiwan.

This week a major overhaul of the U.S. tax system was agreed with no changes to investments tax credits. Earlier versions of the bill proposed removing the credits, which could have hurt investment in wind power.

However, the bill includes the Base Erosion Anti-Abuse Tax, which some in the wind industry worry could curb tax equity investment, which is vital for the green energy sector.

Neubert said this would impact tax equity investment, though he did not expect the impact to be severe.

“There are still some regulations in the new bill that could have an impact on the appetite of these tax equity players,” he said.

Reporting by Stine Jacobsen; editing by Jason Neely

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