Director, Commercial Development

1. Section 2.6.6 – Bidding Criteria

• The global offshore wind market is struggling, with rising costs (vessels; steel; etc …), cancelled projects (USA), undersubscribed auctions (Maine; Denmark), shrinking supply chain (GE Vernova exiting offshore wind turbines), and multiple developers exiting offshore wind (BP; Shell; Equinor; Corio; etc.).   The auction design should reflect the current status of the global offshore wind market. 
• Auction design should reflect a small number of clear priorities: either price, or construction timing, or community engagement, but not all treated equally.  These priorities often conflict, and it is important that the auction design reflect which objectives have the highest priority. 
• Northland recommends a seabed auction design focused on Proponents ability to successfully deliver an offshore wind project.   Successful delivery of an offshore wind can be an 8 – 12 year process – plus 20 to 30 years of operation afterwards - and requires permitting experience, technical expertise, operational experience and a large balance sheet to weather the changes that occur over the lifetime of the development cycle and a project.  An analysis of this capability could involve a review of a Proponent’s capacity to: (i) develop; (ii) procure; (iii) finance; (iv) construct; and (v) operate an offshore wind farm.  The clearest way to assess this capability is a review of existing operating offshore wind projects, plus balance sheet. 
• In support of above, we recommend a review of the Crown Estate Scotland’s ScotWind auction design as an example of a successful mechanism that attracted a broad range of developers with different technology types committed to meet construction targets over multiple years.  The Crown Estate Scotland’s ScotWind auction attracted multiple projects that show a high probability of deliverability. 

1. Section 8 – Socio-Economic Benefits

• The introduction accurately outlines the uncertainty for “pathways to market”, as clearly expressed in the statement: “Multi-billion-dollar OSW investments are not built on speculation. They require certainty of markets and power purchase agreements to secure financing.” (page 286).  This is a pithy synopsis of the OSW investment dilemma.
• In the short term, Green Hydrogen will not be a reliable off-taker for offshore wind development because (i) early-stage offshore wind will be too expensive for Green Hydrogen to purchase; and (ii) Green Hydrogen producers do not have the balance sheet or credit history to permit banks to lend to offshore wind developers (ie., most offshore wind Proponents rely on banks to provide project finance to fund their construction, and banks need to see certainty of long-term revenue from a credible off-taker).  If Green Hydrogen using offshore wind is a strategic priority for Nova Scotia, the province should consider providing a credit guarantee / backstop for Green Hydrogen producers for offshore wind procurement, to mitigate the risk of potential defaults and provide comfort to Proponents and lenders around off-taker credit risk.    
• Alternatively, Nova Scotia could develop transmission and / or export routes to NE USA or Canada (ie., to investment grade off-takers) to support the development of offshore wind market at scale. 

 Section 8.4 Capital Expenditure per Offshore Wind Development and Construction Phase

• The NS RA suggests that initial CapEx for NS would be around C$7 billion / GW (ie., C$ 7 million / MW)(Table 8.4; page 292).  Reference cases were used to arrive at that number, but many of these reference cases (Maine; California; both floating) have not obtained actual final CapEx pricing and projects in those jurisdictions are not currently proceeding;
  • Fixed Bottom Foundations – many of the proposed fixed-bottom site locations (Middle Bank; Sable Island Bank) are far from shore by global standards (both well over 100 km from shore; over 120 km from likely inter-connection points) requiring (i) offshore substations; and (ii) lengthy HVDC export cables, which increase the overall capex relative to reference cases;
  • Floating Foundations – Floating foundations remain more expensive than fixed bottom foundations, despite ongoing investment / innovations by industry and expectation that prices will decline over time.   Notably, recent research and investment into floating offshore wind has declined over the past 12 – 18 months, likely delaying the speed at which prices decline over time;  
• Given above, early-stage CapEx for Nova Scotia is likely higher than the C$7 billion / GW proposed by the NS RA.