The offshore wind industry in Germany, which is dominated by small and medium-sized companies, is facing a paradoxical situation
On the one hand, the industry has very good long-term prospects, with the European Green Deal and the German Government’s plan to build much more offshore wind capacity by 2040.
On the other hand, many small and medium-sized companies are being forced out of the market due to what they describe as an ‘expansion gap’ during which little or no new capacity is due to be installed.
The industry has called repeatedly for a special tender for offshore wind that would help fill this gap, but so far, the government has failed to act. The German wind industry association, WAB, used the occasion of the 16th international Windforce Conference, which took place this week, to reiterate that call for a special tender for offshore wind.
WAB managing director Heike Winkler said, “We very much welcome the fact that the German Government has raised the offshore wind expansion target for 2040 to 40 GW.
“This creates planning security for projects and companies. However, those companies can only benefit from this long-term perspective if they can survive the next five years and the low level of expansion in offshore wind capacity in the North Sea and Baltic.
“There is a spirit of optimism in offshore wind in other markets in Europe, but in Germany we are facing insolvencies and other challenges,” Ms Winkler said.
She said it is “fatal industrial policy” that the German Government has not acted on the promise it made to hold a special tender to fill the gap, and intends to leave spare grid capacity in the North Sea unused in the next few years. Doing so will further weaken the domestic market and innovative small and medium-sized enterprises, WAB believes.
“This free grid capacity and quickly implementable projects that could use it should be put out to tender immediately,” Ms Winkler said.
Lower Saxony environment minister Olaf Lies told the conference, “We need the special offshore tender as spelt out in the coalition agreement. We cannot tell companies in the industry, ‘Don’t worry, in five years you will have your jobs back.’”
WAB chairwoman Irina Lucke also called for changes to the upcoming amendment to Germany’s Wind Energy at Sea Act (WindSeeG).
The Federal Ministry of Economics is proposing the use of a ‘2nd bid component’ (2 Gebotskomponente) when developers bid to build offshore windfarms. But WAB argues that this will have a negative effect on the cost of electricity generation and the likelihood that projects will go ahead. It also argues that it will reduce the number of developers willing to participate in auctions.
Instead of the 2 Gebotskomponente, WAB would like to see the German Government adopt a contract for difference regime, as used in many other European countries where offshore wind is thriving.
Although it is concerned about the expansion gap and ‘2 Gebotskomponente,’ WAB welcomed Germany’s national hydrogen strategy as a positive step, not least because it opens up the opportunity for offshore wind to be used as a source of green hydrogen.