Opinion: German offshore wind tender process must be improved, but oil and gas players welcome

Earlier this week, German grid regulator BNetzA announced the results of the dynamic bidding process for four offshore wind areas in the German North and Baltic Seas, with a total of 7GW to be installed.

If Europe is to reach wind targets, it must step up capacity and all players can contribute to that, argues Stefan Thimm

The news was spectacular: The winners, BP and Total Energies, are not only prepared to build offshore wind turbines on a large scale without subsidies, but will pay the proud sum of €12.6 billion for them.

I am happy about this great development – even if this sum should be better capped in the future. 

But the signal is clear: the industry is strong and determined to build offshore wind farms in Germany and make them a mainstay of the energy transition. 

Oil and gas players welcome 

And more oil and gas producers are also finding their way into the offshore wind business in Germany. This is welcome, as the energy transition as a whole benefits from greater diversity of players in the market. 

The auctions will make an important contribution to increasing the installed capacity of offshore wind in Germany from the current 8.4GW to the legal targets of at least 30GW by 2030 and at least 70GW by 2045. 

In addition, expansion targets for offshore wind energy are growing dynamically throughout Europe and in large parts of the world. 

Earlier this year, nine European governments agreed on offshore wind expansion targets of 120GW by 2030 and 300GW by 2050 across the North Sea. 

In addition, the UK could add a further 100GW. The US government also plans to expand to 30GW by 2030, and the Asian countries have set themselves a target of 235GW by 2030.

Need for improvement

Even if there is still a need for improvement in the tender design, because the uncapped bidding component ultimately places an additional burden on consumers and the supply chain, I want to focus on the great economic opportunities along the entire value chain. 

The expansion will not only be felt in coastal regions, but throughout Germany and Europe – provided we create the necessary industrial policy conditions for this to happen, so that the necessary investments are made. 

The economic opportunities of such a development are enormous. According to expert calculations, €800-1,200 billion in investments are necessary to implement the European goals alone. 

In addition, there are positive effects on value creation and employment through operations over decades. Am I being too euphoric when I see the chance of an economic miracle here? I don‘t think so. 

A global race for resources

What is clear is that neither today's European production capacities, nor the existing port infrastructure, nor the available skilled labour are sufficient to implement such an increase. 

The global competition for resources and production capacities has long since begun. 

Currently, the European value chain is able to provide production capacities for foundations, turbines, cables or erection vessels for an installation of 7GW per year. But we need around 30GW per year to realise the targets.

At the same time, the demand for skilled workers in the field of offshore wind energy will increase across Europe from about 80,000 today to 300,000. 

Port infrastructure

And as logistics centres and hubs of the energy transition, the port infrastructure must be upgraded with more locations capable of handling heavy loads. 

The ports also need more space for the production, manufacturing, handling, storage and recycling of components for the offshore wind farms. 

The national ports strategy announced by the German government must set the right course here. 

IRA and Europe

However, a prerequisite for such a development is that we face up to this challenge. 

For this, politics and business must pull together. The US's Inflation Reduction Act (IRA) shows us how something like this can work. I am sure we can do the same. 

That is why it is so important that we create a regulatory framework that offers our mostly medium-sized industry security for the necessary investments. We are pushing hard for this. 

Among other things, it is about opening up the KfW offshore wind energy programme to the supply chain and accelerating special depreciation for investment costs. 

Last week's maritime motion by the government parliamentary groups provides further important impetus here.

Biodiversity and offshore expansion

Last but not least, the auction rules stipulate that 10% of the bid amount – €1.26 billion – will be split between biodiversity protection and the promotion of environmentally friendly fishing. 

Here, too, it is important to create the conditions so that these funds provided by offshore wind farm developers can be used sensibly to ensure the compatibility of offshore wind development with the protection of biodiversity and coexistence with other user groups of the seas. 

There is also the question of suitable marine areas to implement nature conservation projects such as the national park in the Baltic Sea suggested by the state of Schleswig-Holstein.

Here we offer our cooperation to all stakeholders – good ideas are needed.

Stefan Thimm is managing director of German offshore wind association BWO