10 Aug 2020, 13:46
Benjamin Wehrmann

Possible 'entrance fee' for offshore projects irks Germany's wind power industry


The German economy ministry is mulling a law amendment that could force offshore wind energy investors to pay a fee before building installations at sea, Klaus Stratmann writes in the Handelsblatt. The "entrance fee" for offshore projects, as it is called by industry actors, could apply to offshore wind power auctions where multiple bidders submit bids for zero financial support. In a second stage of the auction, these bidders would then need to submit projects below zero, in which the bidder offering the highest payments would be awarded. The proceedings could then be used to lower the offshore grid fee, meaning that all power customers end up paying less. However, wind industry group BWO said the new rule would inevitably increase power generation costs and favour bidders with a high readiness to assume risk. This would make it particularly challenging for smaller and public investors. According to the group, the rule would mean Germany's offshore wind power market significantly loses attractiveness in comparison to other European countries. "If that's the government's answer to the increasing demand for green energy, this special approach will unnecessarily delay the energy and hydrogen transition," BWO head Stefan Thimm said. The group argued that so-called “contracts for difference” as practiced elsewhere would be a better way to improve the auctioning system.

Germany switched from a guaranteed remuneration scheme for renewable energy operators to an auction-based system in 2017 to bring down costs. A series of zero-support bids for offshore wind projects stunned observers after the change, with bidders largely calculating with drastic cost drops for the technology that had not yet materialised at the time of the auction. Offshore wind power is a key component of Germany’s plan to produce 65 percent of its power from renewable sources in the next decade and production in the German North Sea rose 20 percent in the first half of 2020 compared to the same period last year.

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