German offshore wind tender awards subsidy-free project
Germany’s federal network agency has awarded 1.49 GW of offshore wind capacity under its inaugural offshore wind auction to four projects in the North Sea, with prices tendered “far below expectations”.
The announcement from the Bundesnetzagentur comes just days after the auction opened on April 1 and means almost the entirety of the 1.55 GW of capacity available was secured.
The successful projects comprised:
– Borkum Riffgrund West II (DONG Energy)
– He Dreiht (EnBW)
– Gode Wind 03 (DONG)
– Northern Energy OWP (DONG)
Notably, German utility EnBW will advance a subsidy-free project in what is one of the world’s first offshore wind farms to do so.
Securing capacity with a bid of 0.00 euro cents, EnBW’s 900 MW He Dreiht asset is scheduled to be commissioned in 2025 and is the largest single project to be awarded under the auction. EnBW said its bid took into account the construction date and subsequent “expected technological developments over the next few years”.
“Our plans were based on comprehensive market analyses and intensive discussions with the supplier industry, which is working on numerous new technological developments and is fully focussed on achieving cost efficient solutions,” said Dirk Güsewell, EnBW manager responsible for the expansion of renewable energies.
“The assumptions regarding electricity prices that were used as the basis for our bid were thus set at a moderate level. The anticipated returns are considerably above our capital costs and thus remain attractive.”
The ceiling price for the tender had been set at 12 euro cents per kWh. The Bundesnetzagentur said the highest bid it received was six euro cents per kWh but did not divulge individual bids.
“The average weighted award price of 0.44 cents per kilowatt hour is far below expectations,” said Bundesnetzagentur president, Jochen Homann.
“This shows the auction has unlocked medium and long-term cost reduction potential, which will lead to a reduction in funding to an extent that had not been expected.”
The four successful projects are entitled not only to funding under Germany’s Renewable Energy Sources Act, but also to grid connection – financed through the network charges by the electricity consumers – and the possibility to operate the wind farms for 25 years.
Speaking to CEP before the tender, Norton Rose Fulbright of counsel, Felix Dinger, said he did not expect prices to dip as low as those seen in the Dutch and Danish tenders due to higher construction costs.
However, the highest bid in the German auction was lower than the 7.27 euro cents tendered by Dong to win the Borssele project in the Netherlands last year.
By Kate Thorburn at CLEAN ENERGY PIPELINE