Germany’s Expanded Offshore Wind Target—From “Zero Bids” to “Negative Subsidy”—Will the Means Imperil the End?

11 June 2020
Dominik Hübler, Leonie Janisch, et. al.

On 3 June, the German government passed a revision to the Offshore Wind Energy Act (WindSeeG) that increases Germany’s offshore wind energy target from 15 GW to 20 GW by 2030 and sets an ambitious long-term target of 40 GW by 2040. The revision also changes the way that the rights to develop new capacity are awarded beyond the “zero bid” stage and allows companies to bid for “negative subsidies” (i.e., fixed annual concession payments). The new mechanism will use a dynamic “clock” auction format to determine the bidder willing to pay the highest concession fee.

NERA Associate Director Dominik Hübler, Research Officer Leonie Janisch, Posser Spieth Partner Dr. Wolf Spieth, and Principal Associate Sebastian Lutz-Bachmann examine whether the proposed scheme will be the most cost-effective way of reaching the target, especially when comparing it to the “two-way CfD” scheme now being used in most other European markets with major offshore wind ambitions, such as the UK, France, Denmark, and Poland.

The full paper (in German) is available here, and an extended summary of the paper in English can be found on LinkedIn.

The Federal Association of Wind Farm Operators Offshore (BWO) posted an article on their website explaining why “contracts for difference” are the most cost-efficient support mechanism for offshore wind. BWO links to the NERA & pswp report under the investment section of their article, labeling the report a “Briefing on the reform of the tenders for offshore wind energy.”