Single developer wins 68% of second German tender

GERMANY: After the big success of citizens' projects in the first round of German onshore tenders in May 2017, Germany's second tender has again caused a surprise.

The UKA Group won 42 projects with a total 690MW in Germany's second tender
The UKA Group won 42 projects with a total 690MW in Germany's second tender

In the tender, 37 of the 67 successful bids, or 660MW of capacity, were for citizen projects with "Umweltgerechte Bürgerenergie" (environmentally responsible citizens' energy) in their names, giving away the fact that the same developer, the UKA Group, is involved.

UKA is also the developer behind five other successful projects with "Umweltgerechte Energie" in the name, totalling 30MW, that do not qualify as citizens' wind projects.

In all, therefore, UKA won 42 projects worth 690MW, mainly in eastern Germany, and accounted for 68% of the 1,013MW successful project volume.

The UKA Group, based in Meissen, Saxony – has developed and built 826MW of capacity, including 200MW in Germany last year alone.

It has sold roughly 500MW to investors, including Allianz Global Investors and Commerz Real, according to the company's website.

Most recently, on 1 August, UKA sold four Vestas 3.45MW turbines at sites in Brandenburg and Mecklenburg-Western Pomerania to Hamburg-based renewables operator Capital Stage.

It remains to be seen whether the UKA Group has plans to sell the citizens' wind projects for which it won support in this bidding round to institutional investors.

Under Germany's onshore wind-tendering rules, successful citizens' projects can be sold while still in the development phase, but lose the privilege of securing the highest successful bid payment and, instead, will receive their actual bid payment.

They only retain the right to receive the highest bid price if a change of ownership structure away from the citizen model happens after two years of operation.

"The citizens' wind projects we are partnering profit from our experience in implementing projects cost efficiently," UKA stressed to Windpower Monthly. Only then can projects bid realistic prices with potential for success, the company said.

Contradicting fears that successful citizens' projects without permits may later fail to receive them, UKA said: "The bids are based on realistic calculations, and we are confident that the projects can be implemented with these prices.

"The tender results show that wind energy is competitive compared with conventional types of energy.

"After the experience with the first tender round, we had to ask ourselves: is it possible for a permitted wind project to underbid a citizens' wind project that is in the early stages of development," UKA added.

Citizens' projects have dominated the auctions so far, winning 96% of the total project volume in the first tender and 95% in the second.


"The results made it clear that citizens' projects enjoy significant advantages, and we therefore decided to become a partner for citizens' projects.

"UKA is not a voting shareholder in any of the citizens' projects," the company stressed.

A standard onshore wind farm must have a permit to participate in an auction, meaning the project developer must calculate costs on the basis of the turbines currently available on the market before submitting a bid.

In contrast, citizens' projects do not have to have a permit before bidding and can plan with wind turbines that reach market maturity later, UKA pointed out. They also have an additional two years to complete projects.

"This leads to market distortion. Under current conditions, non-citizens' projects have an extremely small chance of being successful at auction," said UKA.

The German government's aims of maintaining a diversity of players, securing a steady and regional spread of onshore wind growth and stable investment conditions for the wind industry could therefore be undermined, it said.

UKA pleads for all projects, including citizens' wind projects, to be required to have a construction permit before being allowed to bid at auction.

So far the German government has merely decided to test this arrangement in auctions in 2018.

The average winning bid for support in Germany's second onshore wind tender on 1 August 2017 amounted to €0.0428/kWh, €0.01/kWh lower than the average winning bid in the first tender round in May, said German regulatory authority Bundesnetzagentur (BNA) in its report on the tender results.

The lowest bid in the second tender round was €0.035 /kWh, with a highest successful bid of €0.0429/kWh.

The BNA said it received 281 bids totalling 2,927MW of onshore wind in the auction.

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