Latest round of offshore wind auctions leads to higher power prices for industry – consultant

Consultants say that the latest round of offshore wind power auctions – in which major oil companies pledged to pay a combined 12.6 billion euros for the right to build wind farms in the North and Baltic seas – is set to drive up electricity prices for industry, reports business daily Handelsblatt. “Individual customers who sign a contract with one of these wind farm operators from this auction round will likely be confronted with significantly higher electricity prices,” Dominik Hübler of Nera Economic Consulting told the newspaper. This was in stark contrast to the government’s goal to give industry better access to cheap renewable electricity, he said. MP Bengt Bergt, deputy energy policy spokesperson of the Social Democrats’ parliamentary group, said that the outcome of the auction was exactly what lawmakers wanted to prevent. “We now see a competition to outbid, which will lead to higher electricity production costs than necessary,” he told Handelsblatt.

Multinational oil companies BP and TotalEnergies were the winners of Germany’s latest auction for the right to build offshore wind farms in the North and Baltic seas. The companies bid a combined 12.6 billion euros to construct turbines with a total capacity of 7 gigawatts (GW). BP said it would sell part of the generated electricity to industrial customers via so-called "Power Purchase Agreements" (PPAs). Some experts and offshore industry representatives have warned that investors would recoup their massive entrance fee by selling the electricity for a correspondingly high price, regardless of how low the generation costs are. Economy and climate minister Robert Habeck recently proposed to provide billions of euros in state subsidies to energy-intensive companies in Germany to lower their electricity costs if they promise to decarbonise and to stay within the country. The proposal was criticised by chancellor Olaf Scholz and finance minister Christian Lindner and has yet to be agreed by the cabinet.