Germany Opens First Offshore Wind Auction

Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Germany is looking to continue its recent surge in offshore wind rollouts by announcing that it is now accepting bids for the country's first offshore wind auction, which will end on April 1.

Grid regulator BNetzA said that the first of two rounds of auctions for offshore wind tenders will cover 1,550 MW of projects. The maximum electricity price has been set at 120 euro ($127) per megawatt-hour (MWh), while there are also various conditions set out, including location, grid connection and back-up guarantees for the projects starting after 2020. A second auction for 1,550 MW is set to kick off next year and will close on April 1, 2018. The proposed windfarms from the first round are expected to enter commercial operation up to 2021, with second-round projects expected to come online up to 2025.

The winning projects will be offered guaranteed payments for 25 years, up from an original period of 20 years.

"Following on from changes to supporting solar photovoltaic systems, we are now converting the process for supporting offshore wind turbines via a competitive bidding system," explained Jochen Homann, president of the Federal Network Agency. "The amount of compensation is not prescribed by law, but determined by tender on the market. This change ensures a steady and cost-effective development of offshore wind power."

Germany's offshore wind association said that planned projects with a combined capacity of more than 7 gigawatts (GW) are lined up to compete in the auctions. Companies going head to head will include RWE AG (FWB:RWE) (Essen, Germany), E.ON (Dusseldorf, Germany), Energie Baden-Württemberg AG (EnBW) (FWB:EBK) (Karlsruhe, Germany), DONG Energy A/S (Fredericia, Denmark) and Sweden's Vattenfall AB (Stockholm) among others.

Vattenfall said that it has three projects competing in the auction, including Atlantis I, Global Tech II and an extension to the existing Sandbank offshore windfarm.

Gunnar Groebler, Vattenfall's Head of Business Area Wind, said that the results achieved in Denmark and the Netherlands through competitive tenders carried out last year show a clear trend of falling offshore wind costs. "Although the costs for offshore wind projects cannot be transferred with a 1:1 ratio due to the different framework conditions for offshore wind projects in Germany, there is much evidence that the basic trend will also be introduced here," he said.

Germany is among a growing number of countries using auctions to get better value for money for renewable energy projects, many of which have traditionally enjoyed very lucrative levels of financial support. Last summer, Industrial Info reported on Germany's sweeping changes to its Renewable Energy Sources Act, designed to rein in the uncontrolled expansion of renewable energy experienced in recent years. It was agreed that competitive power auctions would replace the existing Feed-in-Tariff (FiT) system. For additional information, July 18, 2016, article--Germany Hits Brakes to Slow Renewable Energy Expansion.

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