At first glance, the Project Delivery Plan Questionnaire (PDPQ) required for Ireland’s Tonn Nua offshore wind farm is similar in approach and format to the Supply Chain Plans (SCPs) required for offshore wind projects that bid into the UK CfD Allocation Rounds 4 to 6. The PDPQ has similar sections on Business Environment, Infrastructure, People, Place and Ideas and like the SCP asks the developer to provide estimates of local content.
We shouldn’t be surprised by this. Governments developing lease or offtake auctions will naturally scour the world for best practice and the UK’s SCP framework had been developed and refined over many years.
There is a key difference, however. The supply chain plan was used as a pass/fail gateway to the CfD auction while the PDPQ is a post award obligation on the winners of the Tonn Nua auction, ESB and Ørsted.
This post-award approach has merit for several reasons:
- No project ever failed an SCP, although some needed to resubmit, so there has not been a pre-award filtering
- Unsuccessful CfD bidders had to devote resource
- In many cases, SCP commitments have required updating to reflect project evolution, and
- A post-award approach leads to a simpler and shorter bidding.
In short, preparing supply chain plans required considerable effort, and the additional value of a pre-auction stage is open to question.
The PDPQ and the SCP are just two of the approaches that governments have used around the world to use the offshore wind industry to achieve public policy goals such as local economic benefit. Unlike the PDPQ, most of these approaches form part of the bidding process.
Governments might argue that it is only at the bidding stage where they have the leverage. This might be true where developers are being scored on local expenditure (such as for some US auctions) but in other cases, ‘commitments’ may be delivered anyway as part of project delivery or as part of a wider licence to operate. The Tonn Nua PDPQ will not be published but would be interesting to know whether the Irish government is ultimately satisfied with the outcome.
I think this all matters for two reasons. First, the development of non-price auction mechanisms require time to develop and consult on, potentially delaying the timing of auctions and slowing industry momentum. Second, it adds a small but real complexity to auctions and increases developers’ risks at a time when they are increasingly selective about where they bid.
Might governments achieve more in terms of social and economic benefit by building an attractive and liberal market that is less reliant on complex bidding requirements? It’s a valid question and the impact of the approach taken here by the Irish Government will provide industry and governments with a useful reference point.
