Germany awards 1GW new onshore capacity
Thursday, Nov 30, 2017
Germany’s grid regulator, the Federal Network Agency (BNetzA), has awarded 1,000 MW of new grid capacity for onshore wind projects in its third such auction this year.

The average quoted price for the 61 successful projects was 38.2 euros (US$45.25) per MWh, almost 20 euros (US$23.69) cheaper than bids submitted in the year’s first capacity auction in May, and a further 10% lower than the second auction in August.

The cheapest bid in the auction, which was significantly over-subscribed, was just 22.20 euros (US$26.30) per MWh.

In awards now indicative of German onshore development, BNetzA stated that all but one of the winning projects are community-owned. Indeed, 89% of the 210 schemes (2,591 MW capacity) that took part overall were community-led.

This is mainly thanks to a policy shift which has put less stringent requirements on community projects than other commercial wind farms. Such projects are also not required to have a construction licence in place before being able to take part in the auction, and the allowance of more time to complete projects (54 months against 30 months for non-community developments).

More than half of the successful projects are in the states of North-Rhine Westphalia (17) and Brandenburg (16).

The regulator said that long lead time was one factor in the low bid prices because bidders expect technological advances to drive down costs. “The bidders now have four and a half years to implement their projects, and according to our judgement, they assume a positive technological development and falling prices in their offers,” said BNetzA head Jochen Homann.

“It’s good to see the costs of onshore wind falling again,” added WindEurope chief policy officer Pierre Tardieu. “This cost reduction is driving wind energy to become the leading source of electricity in the EU soon after 2030, as recently stated by the IEA.”

Yet he also expressed concern that the preponderance of community projects will leave a gap in the installation pipeline between 2019 and 2020. “It’s unsettling to see this slowdown in Europe’s leading market at a time of increasing global competition. Having a permit needs to be a prerequisite for participation in onshore auctions in 2018 and beyond.”

Homann appeared to address this by adding that: “This auction round was dominated by projects without planning permission. In the first two onshore wind auction rounds in 2018 an existing planning permission will be compulsory for participation.”

BNetzA also said that it has set a higher bid ceiling of 6.3 eurocents (US$0.075) per kWh for the four auctions in 2018, in case tariffs fell too sharply to guarantee a sufficient volume of interested bids.

The auction came as news emerged that, for the first time, onshore and offshore wind have generated more electricity in Germany than “hard” coal and nuclear power, according to the Fraunhofer ISE institute. However, use of cheaper lignite coal rose slightly, highlighting Germany’s problematic dependence on coal-fired thermal generation.

This NewsBase commentary is from our REM publication. To sign up for your free trial, click this link: https://newsbase.com/publications/rem-renewable-energy

Read more NewsBase top stories via this link: http://bit.ly/2h95NUx

Find out more about European Oil and Gas from NewsBase