Bidders in Germany’s largest ever offshore wind auction forgo subsidies

Investors are willing to build offshore wind farms in German waters in the Baltic and North Sea without state support, and will now even have to pay to be awarded a contract. In the country’s largest offshore auction to date, which totals 7 gigawatts (GW), several participants submitted “zero cent” bids for all four sites on offer, meaning they don’t require subsidies, the country’s grid agency BNetzA has said. As a consequence, the agency will now start a “dynamic bidding” process, where investors will have to specify how much they are prepared to pay, and the highest bidder will be awarded the contract. BNetzA head Klaus Müller called the tender results “good news for Germany’s energy transition,” given that the lion's share (90%) of the proceeds from the auction will be used to lower electricity costs, with the remainder to be spent on marine environment protection and sustainable fishing.

Germany aims to increase its offshore capacity to 30 GW by 2030, and the current auction is the country’s largest ever by far. The capacity on offer almost matches the country’s entire existing offshore wind capacity of around 8 GW. Some of the auctioned areas still require environmental assessments, which will need to be conducted by the bidders. The cost of constructing new offshore wind farms has fallen markedly in recent years, making it one of the most reliable and profitable renewable power sources on the market. Germany plans to greatly increase its offshore capacity in a bid to reach its ambitious renewable power share target of 80 percent by the end of the decade.