Eneco drops out of tender for massive Dutch offshore wind farm

AMSTERDAM (Reuters) - Dutch energy company Eneco has reversed its decision to participate in the tender to build a large offshore wind farm in the Dutch part of the North Sea, citing rising costs and risks of delays.

Eneco's decision is a setback for the Dutch government, given the company's previous support in the rollout of offshore wind power over the past decade. The company has four offshore wind farms in the Dutch part of the North Sea and is constructing a fifth.

It had planned to bid for the new 4 gigawatt (GW) wind farm spread over two locations 60 km (37 miles) off the Dutch coast, together with Norwegian oil and gas group Equinor .

However, Eneco has decided that the business case for a bid has been eroded due to rising raw material costs, uncertainty over electricity prices and demand, high interest rates and supply chain problems.

Eneco called on the government to reconsider the design of its offshore wind tenders, saying they focus too much on the price builders are willing to pay.

It also said tenders for the wind farms are now too large and should be limited to about 1 GW to reduce risk.

The tender for the 4GW project, the Netherlands' largest so far, closes on Thursday at 1600 GMT.

A government spokesperson said there was no certainty about the number of bids, though several builders had signalled interest in the project.

"We realise the market circumstances have changed since the tender was designed, complicating the business case," said climate ministry spokesperson Noortje Beckers.

Eneco's existing projects have helped to increase capacity in the Dutch North Sea to almost 5 GW and the government is aiming to increase to this almost 21 GW by 2031.

(Reporting by Bart Meijer; Editing by David Goodman)