Germany’s infrastructure regulator accepted four bids for offshore wind farms in the German North Sea this week, with two projects submitted by Danish DONG Energy and another from German EnBW requiring no government subsidy.
The average award price, or subsidy developers require to build the project, was €0.44ct per kilowatt hour. This price was “far below expectations” according to Jochen Homann, president of the regulator, or Bundesnetzagentur in German.
“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,” Homann added. “Offshore wind energy is categorically proving its competitiveness.”
The projects awarded total 1,490MW out of 1,550MW up for auction. A second offshore wind auction will be held next April, with 1,610MW going out to bid.
The largest project awarded was EnBW’s 900MW He Dreiht wind farm, which required no subsidy. DONG submitted six bids and was awarded three of the projects – the 110MW Gode Wind 3 and the 240MW OWP West and Borkum Riffgrund West 2. The Gode Wind 3 bid price was €6.00ct/kWh, the only awarded project with a subsidy attached.
The projects will not be put into operation until 2021 to 2025, which both DONG and EnBW cited as a factor in their zero subsidy bids. By then, larger turbines are expected to be on the market, making energy production more efficient. Grid connection, a key component of bringing energy onto the market, is not included in the bid price.
Still, the auction is seen as a positive sign for the industry.
“The zero subsidy bid is a breakthrough for the cost competitiveness of offshore wind,” DONG chief executive Samuel Leupold said. And EnBW chief executive Frank Mastiaux noted that “offshore technology has also made a quantum leap in terms of efficiency”.
DONG operates 3.6GW of offshore wind capacity in Germany, the UK and Denmark, including 902MW in German waters. EnBW operates two wind farms with around 330MW capacity.