Germany launches 7GW offshore wind tender with negative bidding

German energy regulator Bundesnetzagentur (BNetzA) has launched an auction for four new offshore wind sites in the North Sea and the Baltic with a combined capacity of 7GW.

One site in the auction is in the Baltic Sea, 25km off the coast of Rügen Island (Image credit: Ansgar Koreng)
One site in the auction is in the Baltic Sea, 25km off the coast of Rügen Island (Image credit: Ansgar Koreng)

But the auction will be held using a “dynamic” bidding process whereby bids as low as zero cents per kilowatt hour will be considered. If multiple bids are tied for the lowest value, the bidder with the greatest “willingness to pay” will be awarded the lease.

This so-called ‘negative bidding’ arrangement for auctions has been consistently criticised by the wind sector, including by industry organisations and project developers – though it has not necessarily deterred the latter from competing.

Up for tender are three sites in the North Sea, around 120km northwest of Heligoland – each with a 2GW capacity. An additional 1GW site in the Baltic Sea is located about 25km off the coast of Rügen Island.

Bids must be submitted by 1 June.

BNetzA said the tender marked an important step towards Germany achieving its offshore expansion goal of 30GW by 2030.

“The capacity tendered today exceeds the previous annual tender volumes for offshore wind energy many times over,” Klaus Müller, the president of the agency said.

The agency confirmed that there is no preliminary investigation of the proposed sites that would typically analyse the marine environment, subsoil and meteorological conditions.

Responding to the announcement, managing director for the Federal Association of Offshore Wind Operators (BWO) Stefan Thimm told Windpower Monthly: "We are pleased that the tender for the areas that were not centrally pre-examined has now been officially announced. We see the significant reduction in the bid levels, as requested by the BWO during the consultation, as an important step for the operators. The current level of the bid levels is more in line with our ideas.”

He added that the BWO “continues to be critical of sticking to an uncapped bid component”.

Heike Winkler, managing director of the German offshore wind group WAB, agreed, and told Windpower Monthly: "We want to have 50GW installed in the North and Baltic Seas in 2035, so these investments are necessary. The offshore wind industry has already massively reduced costs before the expansion stop in Germany. However, the intended bidding process primarily favours cost pressure, which is why we are not very enthusiastic about this form of tendering.”

Despite these concerns, offshore wind giant Ørsted has not necessarily been put off competing.

The Danish developer’s CEO Mads Nipper said the company would not rule out participating in the upcoming German offshore wind tenders, despite having significant reservations about the proposed system.  

“We don’t think it’s the best way. Whether it is negative bids or sky-high payments for concession bids, it is something that risks the power price being higher for consumers,” Nipper told investors and journalists in a conference call. 

Introducing these rules into offshore tenders risks “being an invitation for bidders who may not be experienced enough or financially disciplined enough, to bid in with a project that may not eventually be built,” Nipper said.

Meanwhile, the Bundesnetzagentur confirmed that it would announce plans for a further offshore wind auction – for 1.9GW – by 1 March.

Additional reporting by Killian Staines

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