The German Government, which is currently reviewing auction designs for offshore wind, should change its auction scheme to two-sided contracts for difference (CfD) to enable it to rapidly boost capacity
In a two-sided CfD, windfarms ‘pay back’ when the market price exceeds the auction price.
“Government and consumers would pay much less overall than they do in the current system” if they adopted such a system, WindEurope believes.
WindEurope chief executive Giles Dickson said, “Financing costs are also much lower – 2.5 percentage points – than with zero-subsidy bidding.
“Governmental considerations around negative bidding in offshore auctions could endanger Germany’s continuous expansion of offshore wind, threatening its climate and renewable energy targets.
“Negative pricing is likely to deter investors, push up financing costs and increase the pressure on the already struggling supply chain. No other country in Europe is seriously considering negative pricing. A number of countries, however, are moving towards CfD.”
On 13 March, the German Ministry for Economic Affairs and Energy discussed with industry representatives how to deliver the planned new 20-GW target for offshore wind by 2030.
“For a number of reasons, Germany has gone slow in its build-out of offshore wind, but the country has an opportunity to put offshore wind back on track,” Mr Dickson said.
“They could comfortably deliver 20 GW by 2030. Other countries in Europe, such as Denmark, the Netherlands or UK, have defined their 2030 targets for offshore wind, and they’ve all gone for ambitious volumes. Germany will be less attractive to investors if they don’t raise their expansion target.”
Offshore wind has become an integral part of the energy transition and an important industrial factor in Germany. The European Commission considers up to 450 GW offshore wind capacity throughout Europe by 2050. Germany can supply at least 50 GW, according to various studies.
“But a consensus on how to reach these targets beyond 2030 is necessary,” said Mr Dickson. “On the back of these ambitions, policymakers need to give clear signals on grid development and maritime spatial planning in the German exclusive economic zone. The grid investments can take years to be agreed and delivered. Berlin should use its current chairmanship of the North Seas Energy Cooperation to call for a more co-ordinated European offshore wind expansion.”