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German offshore wind draft law sets 40 GW target by 2040

Highlights

Draft law lifts maximum bid, adds second component to avoid draw

Cabinet to decide Wed, stakeholders call for adjustments

Hydrogen (non-grid) fields to be included at a later stage

London — Germany's cabinet is set to finalize a new offshore wind law on Wednesday, enshrining a 20 GW target for 2030 and setting a new 40 GW ambition for 2040.

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In an online webinar Friday, German utility EnBW, developer of Germany's 610-MW Hohe See/Albatros offshore wind farm, welcomed the more ambitious long-term targets, but said the most important near-term goal was to avoid a pile-up of zero-subsidy bids.

"A draw between a number of zero bids" in the next tender needed to be ruled out, EnBW's head of generation Dirk Guesewell said.

Tuesday's government draft tender model with a second bid component was workable, but a UK-style Contracts for Difference model would also be workable, he said with lobby groups BWO, BDEW and WindEurope calling for such a model.

Offshore wind lobby group Stiftung Offshore said long-term targets would improve planning certainty, but called for changes to draft tender details requiring "additional payments in the event of multiple zero-bids."

"This adds further financing risks for bidders and reduces the likelihood that the projects will come about," Stiftung Offshore Wind managing director Andreas Wagner said.

The draft reform of the offshore wind law (WindSeeG) is set to lift the maximum bid from zero, after two successful zero bids by EnBW and Orsted in the first two auctions in 2017-18, it said.

The draft adds a second component which would differentiate between various zero bids in the next tender, planned for 2021.

EnBW in particular welcomed the option for delayed payments in the form of a "grid expansion contribution" for 15 years after four years of operation of the project, it said.

Germany's federal government, the five Northern coastal states, grid regulator BNetzA, maritime regulator BSH and grid operators on May 12 signed a detailed plan to boost offshore wind capacity to 20 GW by 2030.

The 2030 target was capped at 15 GW due to internal grid bottlenecks, but the coalition agreed last October to add 5 GW to achieve the 2030 climate targets.

The plan sets out a timetable and milestone to coordinate maritime planning for the additional offshore sites and their grid connection with the Federal Hydrography Office (BSH) taking on further permitting tasks, while grid regulator BNetzA is working closely with grid operators to establish the new grid links and integrate them into the 2030 national grid plan.

German offshore wind capacity is 7.7 GW with all projects benefitting from legacy feed-in tariffs now online.

The government auctioned 3 GW in 2017-18 with RWE's Kaskasi project the first to proceed to a final investment decision for a 2022 start.

The two subsidy-free projects by Orsted and EnBW are set to come online in 2025. Both are awaiting FIDs.

According to EnBW, synergies from its nearby Hohe See project, its developing offshore expertise, larger turbines and rising power prices would make its zero-bid project viable.

The company is currently tendering for turbines and other components for the 900-MW, He Dreiht project and hopes to have the technical aspects fixed by end-2020 to adjust permits with the green light for construction expected in 2023 for a 2025 start.

Rapidly advancing turbine technology has reduced costs sharply with the He Dreiht project likely to use turbines around double the size of the 7-MW types used at Hohe See, it said.

Green hydrogen plans

EnBW welcomed the focus on other non-grid linked offshore wind fields, but said it was too early for specific projects.

The draft law is expected to incorporate such plans, but not yet award them on a "first come, first serve" [Windhundverfahren] basis.

EnBW was evaluating its hydrogen strategy and how it would fit into its gas strategy, generation/portfolio head Guesewell said.

The state minister for energy of Baden-Wuerttemberg Franz Untersteller warned grid expansion between North and Southern Germany would have to proceed rapidly to guarantee security of supply in the South. The state is a key shareholder in EnBW.

The Germans government is currently split on support details for various forms of hydrogen, which has delayed the national hydrogen strategy since the end of 2019.