10 Sep 2020, 13:55
Benjamin Wehrmann

Future of German offshore wind auction design contested in parliamentary hearing

Clean Energy Wire

Energy market experts have debated the future design of offshore wind power auctions in Germany in a parliamentary hearing. Many have railed  against the government's idea to charge an "entrance fee" for bidders by holding a second round of auctions for those which submitted a zero-support bid and which awards those willing to pay for their right to construct a wind farm. Pierre Bauer, of Siemens Gamesa, told the parliament's committee for the economy and energy that contracts for difference (CfD) would offer a much more viable option to keep offshore wind power costs low. CfDs allow operators to receive guaranteed feed-in remuneration at times of low power prices but also oblige them to pay out part of their profits when power prices are high. Bauer said a second round of auctions would considerably increase loan costs due to banks charging higher risk premiums and criticised that Germany would be the only country in Europe that follows such a model. Stefan Thimm, head of offshore wind lobby group BWO, said the "entrance fee" would increase power generation costs by about 30 percent. On the other hand, Christoph Maurer of consultancy Consentec, which assisted the economy ministry in drafting the proposal for a second round of auctions, said the model would facilitate a market integration of offshore wind, whereas CfDs erected a "firewall" that shields bidders from open market competition. Peter Reitz of energy exchange EEX also defended the model, arguing the technology had now "grown up" and no longer needed guarantees to survive.

The economy ministry had proposed the "entrance fee" for zero-support bidders to further reduce costs in wind power tenders, arguing that proceedings could be used to lower the offshore grid fee and make power cheaper for all customers. The idea has irked offshore wind power companies, arguing that zero-support bids were only possible because bidders were calculating with drastic cost drops for the technology that have yet to materialise.

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