Subsidy-free wind energy projects emerge in German auction

Germany’s first offshore wind competitive auction brought about some interesting results, with an average bid that was far below expectations, according to the country’s federal network agency Bundesnetzagentur (BNetzA), along with the two subsidy-free offshore wind projects.

According to BNetzA, the auction’s average project surcharge value is EUR0.44 (USD0.47) per kWh. The selected projects are scheduled to go into operation after December 31, 2020.

EnBW won the largest share of the auction round with the 900 MW He Dreiht project. This is a significant milestone for EnBW, which currently operates just 336 MW of offshore wind farms in Germany. The company plans to commission the He Dreiht project in 2025.

Dong Energy won three offshore wind projects with a total capacity of 590 MW: the 240 MW OWP West, the 240 MW Borkum Riffgrund West 2 and the 110 MW Gode Wind 3 wind parks. All of them are located in the North Sea and are planned to be commissioned by 2024.

For two of the projects – OWP West and Borkum Riffgrund West 2 – Dong Energy made bids at zero EUR per MWh, i.e. these projects will not receive a subsidy on top of the wholesale electricity price. The Gode Wind 3 project was awarded based on a bid price of EUR60 (USD64.23) per MWh.

Dong Energy’s Samuel Leupold says: “The zero subsidy bid is a breakthrough for the cost competitiveness of offshore wind, and it demonstrates the technology’s massive global growth potential as a cornerstone in the economically viable shift to green energy systems. Cheaper clean energy will benefit governments and consumers – and not least help meet the Paris COP21 targets to fight climate change. Still it’s important to note that the zero bid is enabled by a number of circumstances in this auction. Most notably, the realisation window is extended to 2024. This allows developers to apply the next generation turbine technology, which will support a major step down in costs. Also, the bid reflects the fact that grid connection is not included.”

Dong Energy already operates 3,600 MW of offshore wind across Germany, UK and Denmark. 3,800 MW is under construction across the three countries – most notably the 450 MW Borkum Riffgrund-2 park in Germany, expected to be commissioned in 2019.

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