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Germany raises offshore capacity wind target to 40 GW by 2040

June 11, 2020 Wind InfoLink

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The German government approved an amendment to the Wind Energy at Sea Act   in May that raises its offshore wind target to 40 GW by 2040. The draft came shortly after the country increased its offshore wind capacity goal for 2030 from 15 GW to 20 GW.

The ambitious goal aside, the draft also stipulated that second auctioning rounds would take place in case of zero bids. The tendering model allows negative bidding to reduce government expenditure for offshore wind.

The auction design, however, could undermine the development of the country’s offshore wind development, said Germany’s Wind Energy Agency (WAB). As Wind InfoLink pointed out in Wind industry is taking a battering as electricity prices slump in Europe, developers would seek more returns with higher subsidies or lower price volatility. And second auctioning rounds would increase risks for investors and banks due to price uncertainties and lower bidding prices.

The WAB and the Association of German Offshore Windfarm Operators (BWO) have been urging the government to adopt Contracts for Difference (CfD) scheme, which the two said would create rather stable investment environment and relieve consumers’ burden in Germany, as the government would cover the gap between the pre-agreed ‘strike price’ and the ‘reference price.’

However, there are some considerations if the government adopts CfDs for renewable development. Since CfD prices mirror real market prices, the government would face increasing finance costs if market prices are low. That might affect the budget the government is willing to commit to in the future.

While warning that the dynamic tendering process proposed in the draft bill would harm the industry’s development, Germany’s wind industry organizations have welcomed the amendment that expands the wind capacity target to 40 GW by 2040. 

“The 40 GW target for 2040 contained in the draft bill would bring back investment security and give the domestic wind industry a fresh start with its experience background," said the WAB. The agency projected that the country will surpass the 20 GW set for 2030.

Reference:
Germany Drafts Offshore Wind Bill with 40 GW-by-2040 Goal, Dynamic Tendering Process
WAB e.V. welcomes new 40-gigawatt long-term target for offshore wind
Germany raises offshore wind capacity target to 20 GW by 2030
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