Germany may have to draw lots to decide offshore tenders as coalition clears way for new law

London — Germany's next offshore wind tenders may have to be decided by drawing lots after the governing coalition reached a compromise on a new offshore wind law (WindSeeG), sector association BWO said Nov. 2.

The coalition agreement significantly lifts offshore wind targets to 20 GW by 2030 and 40 GW by 2040, according to Joachim Pfeiffer, a lawmaker responsible for economic policy in Chancellor Angela Merkel's CDU/CSU faction.

"Support and tender design will allow for future zero bids. The second bid component will be waived temporarily pending an evaluation," the lawmaker said.

The draft law, agreed in June by the cabinet, introduced a dynamic second bid component to differentiate between multiple zero bids.

The BWO said removing the second bid component was positive as it would have led to rising investment costs and project completion risks.

However, with no Contracts for Difference mechanism planned, lots would have to be drawn in the case of multiple zero subsidy bids, it said.

The industry, which had called for a UK-style CFD system, accepted a deeper evaluation of the financial frameworks to support offshore wind was required, the BWO said.

The draft law lifts the maximum bid for the next tenders for 900 MW each in the next three years to Eur73/MWh for 2021, falling to Eur62/MWh for 2023.

Under current law, the maximum bid in the 2021 tender would have been zero after two 900 MW projects were awarded without subsidies in the inaugural tenders 2017 and 2018.

In May, the government agreed to move maritime planning from grid regulator BNetzA to the federal hydrography office (BSH), allowing the grid regulator to focus on establishing more offshore grid links and integrate them into the 2030 national grid plan allowing for higher expansion targets.

Internal grid bottlenecks prompted the government to cap offshore capacity at 15 GW by 2030.

German offshore wind capacity stands at 7.8 GW, with all projects benefitting from legacy feed-in tariffs now online.

A further 3 GW were awarded by tender in 2017 and 2018, with the first project to come online in 2022.

The two 900 MW zero-subsidy bids awarded to Orsted and EnBW are not expected online before 2025, with FIDs still pending.

The next large 900 MW project is scheduled to be tendered in 2022 after next federal elections in September 2021, with three smaller areas set to be tendered 2021.

Two of the 2021 tender areas (N-3.7 and N-3.8) are on the western fringe of the German North Sea close to the island of Borkum, with the third one in the Baltic Sea east of Ruegen.

GERMAN OFFSHORE WIND PROJECT TENDERS

Source: BNetzA, Developers, Deutsche WindGuard