German regulator triggers onshore wind rescue

GERMANY: Energy regulator BNA has triggered a rescue measure and set a maximum price bid of €63/MWh for onshore wind auctions in 2018.

Energy regulator BNA has set a maximum price bid of €63/MWh for 2018 auctions (pic: Petra Klawikowski)
Energy regulator BNA has set a maximum price bid of €63/MWh for 2018 auctions (pic: Petra Klawikowski)

The maximum bid allowed would otherwise have dropped below the generation cost of onshore wind, potentially resulting in several years of doldrums for the sector with the risk that Germany will fail to reach its renewable targets, said the BNA.

Special concessions for citizens’ wind projects in the auctions — allowing them to bid for projects that are not yet permitted, and then have 54 months for implementation — resulted in sharply falling bids in 2017’s three auctions.

This is because they have been able to incorporate price and performance expectations for 2022, that is, for turbines that will be coming on to the market in two years’ time, said the BNA.

The maximum bids were €57.8/MWh, €42.9/MWh and €38.2/MWh for the auctions held this year in May, August and November respectively.

But, according to the BNA, current onshore wind generation costs are roughly €56/MWh at a standard location.

The 2017 renewable energy act mechanism for fixing the maximum bid at each auction in 2018 is the average of the maximum bids from the three previous auctions, raised by 8%. This works out at €50/MWh for the first 2018 auction and €47.2/MWh for the second.

But a special measure passed early in summer 2017 requires all participating projects, including citizens’ projects, to have a permit and be implemented within 30 months. They must therefore bid with a view to the generation costs that can be expected between 2018 and 2021.

A maximum bid of €50/MWh falling to €47.2/MWh is unlikely to attract project developers while generation costs stay at around €56/MWh, though.

The risk that German onshore wind could collapse over the next three to four years, endangering the aim to achieve 40-45% of gross electricity consumption from renewables by 2025, prompted the BNA to trigger a rescue clause in the 2017 renewable energy act.

This allows the maximum bid to be fixed afresh at up to 10% lower than the current maximum bid, which had been fixed at €70/MWh for 2017. Accordingly, the BNA has fixed the maximum bid at €63/MWh.

The BNA has implemented "the right correction measure to counter the distortions of the auction mechanism", said Hermann Albers, president of Germany’s wind energy association, Bundesverband WindEnergie.



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