The bosses of Portuguese utility EDP and oil company Galp on Tuesday warned the government the guaranteed price of the power generated will be key to preventing the first auction of floating offshore wind farms from failing like a recent one in Britain.
Portugal's first auction for floating offshore wind farms, set to be launched by year-end, is slated to attract many investors, including from EDP and Galp, the two largest investors in the country's energy industry.
It comes after offshore wind developers stayed away from Britain's latest renewable energy auction earlier this month, arguing the price offered by the government did not reflect rising industry costs.
At a conference held in Lisbon by broadcaster CNN Portugal, Environment Minister Duarte Cordeiro said a working group is studying the auction mechanism, which will contain a guaranteed price for the output of the wind farms, to make sure the auction will be a success.
"We do not ignore what is happening in other countries," he said, adding: "We always have to be cautious when we talk about these topics because we're talking about companies that may or may not present bids for the auction."
EDP's Chief Executive Miguel Stilwell said that the utility, which teamed up with French rival Engie ENGIE.PA, is analyzing the auction but said that "floating technology is a much more expensive technology" than the one used for wind turbines fixed to the seabed near the shore or those on land.
He said "the auction in the United Kingdom was deserted because the guaranteed price was very low", a view shared by Galp's Chief Executive Filipe Silva.
"If (the Portuguese government) wants to have an auction with several bidders it will have to guarantee a price higher than what we have in the market today," Silva said.
(Reuters - Reporting by Sergio Goncalves; editing by Inti Landauro and Emelia Sithole-Matarise)