Germany announces winners of latest offshore wind auction

Out-Law News | 14 Sep 2021 | 9:48 am | 1 min. read

Germany’s Federal Network Agency (BNetzA) has announced the results of its most recent offshore wind auction, with two companies picking up the development rights for three sites in the North and Baltic seas.

RWE Renewables won the auction for two of the sites, with EDF Renewables winning development rights for the third site.

The auction was the first tender round under Germany’s new ‘central model’ which was introduced through legislation in 2017. Under the model, only pre-approved areas are auctioned by the state.

The successful companies have won the right to a network connection for the relevant site, which is paid for by consumers’ electricity charges, and the ability to operate an offshore wind farm for 25 years. All three projects are scheduled to be commissioned in 2026.

Boldis Alice July_2019

Alice Boldis, LL.M.

Rechtsanwältin, Senior Associate

It sends out a very strong and positive signal for the future of the German offshore wind market that several ‘zero-cent’ bids were made

The successful bidders, along with others submitting tenders in the auction, made ‘zero-cent’ bids which means they plan to operate the wind farms without any state support. The BNetzA said it had therefore carried out a lottery to determine the winners of the auction, as stipulated by law.

“It sends out a very strong and positive signal for the future of the German offshore wind market that several ‘zero-cent’ bids were made,” said Alice Boldis, an expert on major projects in the energy sector at Pinsent Masons, the law firm behind Out-Law.

“Such a signal is particularly welcomed in 2021, which is a 'gap year', where not a single new offshore wind farm will start feeding into the German grid,” Boldis said.

However, two of the three sites – N-3.8 in the North Sea, and O-1.3 in the Baltic Sea – are subject to entry rights by the two project developers who had originally planned offshore wind farms there: Nordsee Two, owned by Northland Power and RWE Renewables, and Iberdrola’s Windanker. They now have until 2 November 2021 to notify BNetzA if they wish to exercise their rights in respect of these sites.

Germany raised its targets for offshore wind production from 15 GW by 2030 to 20 GW by 2030 and 40 GW by 2040 through the implementation of amendments to the Wind Energy at Sea Act on 10 December 2020. The increased target until 2030 requires a total capacity of 9.2GW to be tendered, awarded and realised through annual tender rounds from 2021 onwards.

“Expansion of offshore wind has a key role to play in meeting Germany’s ambitious net-zero target until 2045 and, thus, it is to be expected that the period 2020 to 2022 marks the low point of offshore wind commissioning in German waters for many years to come,” said Christian Lütkehaus, an expert on major projects and marine construction at Pinsent Masons.