Denmark awarded 1.8 GW of new offshore wind capacity to Vattenfall, putting behind it the failure of the 2024 auction, when the absence of state backing and a negative bidding scheme failed to attract a single offer.
The Swedish company was selected to develop Nordsøen Midt , a 1 GW wind farm in the North Sea, and Hesselø , an 800 MW wind farm in the Kattegat. The projects are scheduled for completion by the end of 2032 and will be covered by contracts for difference (CFDs) for 20 years.
The result marks the first successful completion of a Danish offshore wind tender in two years and confirms the impact of the regulatory changes adopted by the government. The new structure reduces developers' exposure to electricity market volatility and offers greater predictability regarding future revenues.
Vattenfall submitted the lowest bids for both sites: 504 Danish kroner per MWh for Nordsøen Midt and 542 kroner per MWh for Hesselø .
In total, the round received seven proposals. This level of participation contrasted sharply with the call for proposals launched in 2024 for six areas, which had to be cancelled after the initial sites failed to receive any offers.
That failure sparked a debate about the viability of the Danish model. Developers had to bear the costs of projects without revenue stabilization mechanisms and compete by making unlimited negative payments to the state, in a context of higher interest rates, inflation, and a more expensive supply chain.
Following two political agreements reached in 2025, Denmark relaunched the process with bilateral contracts for difference and more flexible conditions.
Through this mechanism, the State guarantees a reference price for electricity. When the market price falls below the agreed level, the project receives compensation; when it exceeds it, the operator returns the difference.
The structure reduces commercial risk and allows access to financing on better terms. For the government, it also limits the cost of public support if electricity prices rise during the contract's term.
“The Danish Energy Agency has maintained extensive dialogue with the market and developed a process for two new parks in the North Sea and Kattegat. We are pleased to have achieved a positive outcome,” said Stig Uffe Pedersen, Deputy Director General of the agency.
Nordsøen Midt will be located approximately 20 kilometers offshore, while Hesselø will be situated about 30 kilometers away. The necessary electrical connections have already been reserved, and the permits will have an initial duration of 30 years, with the possibility of a ten-year extension.
The lease agreements will begin once the facilities are completed. In addition to the financial requirements, the bids included sustainability and social responsibility conditions.
These include a commitment to recycle wind turbine blades. Hesselø will also be required to incorporate design measures aimed at integrating and protecting nature within the project area.
Once operational, the two parks will produce enough electricity to supply around 1.8 million Danish homes .
Contracts for difference restore confidence to the market
The recovery of the Danish auction reinforces the position of contracts for difference as one of the main tools to support the deployment of European offshore wind.
The model has already been used in markets such as the United Kingdom to reduce the cost of capital and protect projects against extreme fluctuations in wholesale prices.
WindEurope interpreted the result as a demonstration that the design of tenders can determine whether a round attracts competition or ends up empty.
“Contracts for difference offer the risk allocation and profitability visibility that developers need to invest,” the association noted.
For Tinne van der Straeten, CEO of WindEurope, the round shows that reducing financial risk can translate into competitive bids and new domestically produced electricity.
The sector is now demanding that Denmark make this mechanism a permanent component of its upcoming auctions and bring forward the planned schedule for new awards.
The country has another call planned for Nordsøen Syd , an area with a minimum capacity of 1 GW whose deadline for submitting bids will end in October 2028.
The industry believes that waiting until then could create a gap in projects and affect the local supply chain, especially manufacturers, ports, contractors, and specialized suppliers.
Denmark pioneered offshore wind energy with the commissioning of the world's first offshore wind farm in 1991. It currently has approximately 2.7 GW installed and another 1 GW project under construction, scheduled for completion in 2027.
Offshore wind power already covers around 24% of the country's electricity demand. The new wind farms will significantly increase that contribution and strengthen its capacity to export electricity to neighboring markets.
Vattenfall currently operates five offshore facilities in Denmark, with an annual production of approximately 6.5 TWh. The award of Nordsøen Midt and Hesselø expands a portfolio that the company considers strategic for its growth in Northern Europe.
The result also comes after commitments made by North Sea governments to deploy around 15 GW of offshore wind power per year in a coordinated manner between 2031 and 2040.
In return, the industry committed to reducing technology costs by 30% by 2040 compared to 2025 levels. To achieve this goal, regular auctions, larger-scale projects, and a visible portfolio that allows for sustained industrial investment will be necessary.
With 1.8 GW awarded, the country is once again adding offshore capacity. The next challenge will be to maintain the continuity of the bidding rounds and prevent the success of this round from becoming isolated within the European calendar.