Hogan Lovell OffshoreBook 2023 230809 OnlinePDF - Flipbook - Page 173
Offshore Wind Worldwide 2023
4. OFFTAKE ISSUES
4.1 Offtake, remuneration
and tariff scheme
The development of an OWF involves a lot
of costs. The development process takes
time and requires many studies, procedures
and consultations with local residents and
other interested parties. There are construction costs of the OWF, the purchase of the
wind turbines, the grid integration, and the
costs once the wind farm is up and running.
At the same time, a wind farm also generates
revenue. During the operation of an OWF,
there are revenues in the form of the sale of
electricity, green certificates ("Garanties van
Oorsprong") and SDE+ subsidies.
The use of long-term contracts for the
purchase or sale of electricity ("PPAs") is
increasing. A PPA is intended to reduce
financial risks by providing for a long-term
price agreement with a customer. As there
is no legislation on these PPAs, no specific
stipulations for the content of such PPAs
exist. However, in practice, there is a certain
established market practice as to the usual
and required contents.
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4.2 Consequences of a project delay
The consequences of delayed project completion with regard to the offtake regime
may depend on what is agreed upon by the
involved parties.
When a PPA is involved, the consequences
may depend on the respective provisions in
the PPA. Usually, a delay of the project would
entitle the offtaker to demand a reasonable
compensation. Additionally, termination
remedies would normally be available for
prolonged force majeure events.
Furthermore, the Electricity Act ("Elektriciteitswet") and the Ministerial Order Offshore Electricity Grid Compensation Rules
("Besluit schadevergoeding net op zee")
set out the liability regime applicable to the
OWF owner in case of a delay in the completion of the offshore grid or the unavailability
of the offshore grid.
In case of a delayed completion of the grid,
damages consist of, for example, consequential damages and postponed electricity
sales revenues.
