The 40-turbine wind farm has been authorised for a site 34 kilometres west of the German island of Sylt in the North Sea. It is at an advanced stage of development and is planned to provide a total capacity of 388MW using Siemens 3.6MW turbines.
WPD may be one of the first developers to benefit from improvements in German offshore wind feed-in tariffs, as set out in the federal government's recent draft national energy concept. The concept, which covers the period to 2050, states that the first ten German offshore projects will receive support in order to collect experience in dealing with the technical risks and to facilitate financing. This support is likely to take the form of finance from a special EUR5 billion credit fund called Offshore Windenergie. This will be set up next year by the German bank KfW and will offer market interest rates for financing offshore projects.
German offshore wind feed-in tariff arrangements may also be altered to increase initial payments per kWh, with the extra expenditure compensated for by a shorter period of guaranteed payments.
The Butendiek project was initiated in 2001 as a German "people's wind station" by 8,400 locals from the region. In 2007, it was sold to Airtricity, an Irish company that was taken over by Scottish and Southern Energy in 2008. Airtricity was merged into SSE Renewables in March 2010.
SSE Renewables' interest in its German projects waned towards the end of 2009, after payment rates for UK offshore-generated electricity raised by EUR0.03 to EUR0.18/kWh. Currently, German offshore wind power commands a price of EUR0.013/kWh, with an added bonus of EUR0.02/kWh for projects installed before the end of 2015. The starting rate for the tariff applies for 12 years, but for turbines standing at least 12 nautical miles seaward and in a water depth of at least 20 metres, the tariff is extended by 0.5 months for each extra nautical mile and by 1.7 months for each extra metre of water depth. When that rate expires, the tariff falls to EUR0.035/kWh for the remainder of a 20-year period.
WPD may also be keen to press on with the project as the draft energy concept foresees a clampdown on project hoarding. Permit rules will be altered in 2011 so that wind farm permits can only be extended if investors have undertaken concrete steps towards implementation, such as in financing or construction. Otherwise, the offshore project areas will be assigned to other players.