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Permit backlog further slows German onshore wind growth

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Onshore wind additions are already set to plummet following changes to Germany's renewables support scheme.
Source: AP

Legal and administrative delays have slowed the approval rate for German onshore wind projects this year as the sector is already bracing for a steep decline in capacity additions in 2019 and 2020 resulting from changes to its renewables support system.

The first nine months of the year saw just over 1,000 MW of onshore projects gain approval under Germany's Federal Immission Control Act, an element of German environmental protection which is a prerequisite to participate in onshore wind auctions, according to an analysis of federal registers by wind industry association BWE.

Developers and wind turbine manufacturers have been calling attention to the slow pace of permitting, which they say is worsening conditions for the German wind industry just as changes to support schemes are putting the brakes on onshore wind power expansion.

"The crisis is already on the horizon," Alexander Koffka, managing director of public and investor relations at renewable developer ABO Wind AG, said during a panel discussion on the German market at the Global Wind Summit in Hamburg on Oct. 1. "We have a real problem," he added. "There's a tremendous breakdown of permissions."

The length of the permitting process has roughly doubled — from between 300 days and 400 days in 2016 to up to 700 days for some projects in the second half of 2017, according to BWE, with no projects granted permits in under 500 days. Approximately 10 GW of onshore wind projects were stuck in permitting procedures in May of this year, according to a study cited by BWE.

The fact that it is taking longer for projects to get approved is not just a problem for developers, said Knud Rissel, managing director for northern Europe at German turbine manufacturer Senvion S.A. "The planning security is not there, which is very important not only from a developer but also from an OEM point of view," he said during the panel in Hamburg.

Just over 1,600 MW of onshore capacity was added in Germany in the first half of 2018, a significant but expected slowdown compared to the previous year, according to a study by consultancy Deutsche WindGuard. A slump in installations had been anticipated following the switch from feed-in tariffs to auctions from the start of 2017 because the government initially allowed longer project timelines for citizen-owned energy cooperatives and also freed them from the need to obtain construction permits before auctions.

Citizen projects won most of the capacity on offer in the first auctions and critics say this is creating a cliff-edge for new installations in 2019 and 2020 as developers take advantage of the long lead times and projects with too-optimistic price bids fail to be realized. Tender rules were subsequently changed to prevent commercial projects posing as citizens' initiatives from dominating auctions.

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BWE estimates that this year will see capacity additions of 3,500 MW, which could slow to 2,000 MW in 2019, although some forecasts are even lower. A study conducted by Deutsche WindGuard for the government in March projected gross additions of only 9,300 MW in the period of 2019-2023, with new installations reaching a low of 1,300 MW next year, followed by a gradual recovery.

Between 2014 and 2017, Germany added 4,600 MW of onshore wind power per year on average and it currently has more than 50,000 MW of installed capacity.

Special auctions could plug capacity gap

To counter the slowing expansion and prop up domestic wind manufacturers, the industry has been calling on the government to launch 8,000 MW worth of special auctions for onshore wind and solar, which were promised in a coalition agreement earlier this year. The government has been dragging its feet on the special tenders, which could be partly due to concerns over grid capacity and a lack of suitable sites, but a government committee recently resolved to start putting them into law in by the end of October, for delivery in 2019 and 2020.

The special volumes may not have much effect, however, if resulting projects do not get approved. "It's important that we address these permitting roadblocks first," Rissel said.

Developers can face stiff resistance from local communities who object to wind farms on environmental, health and aesthetic reasons.

The reform of Germany's renewables law in 2016 also specified a deployment corridor to limit annual capacity additions, so as not to overwhelm Germany's grid infrastructure, which is increasingly unfit to handle the flexible generation from wind and solar. In the case of onshore wind, tender volumes were capped at 2,800 MW per year until 2019.

Projects that still qualify for feed-in tariff support in a transition period until the end of 2018 are seen still dominating capacity additions this year, with auction-supported projects — many of them awarded under the initial rules favoring citizens' initiatives — taking over from 2019.

Approximately 1,900 MW of onshore projects that received permits before the end of 2016 and have yet to be commissioned could still qualify to receive a feed-in tariff under the old system if they come online by the end of the year, according to Deutsche WindGuard.

The German grid regulator is currently evaluating bids for the fourth and final onshore tender of the year.