Germany has announced the winners of its 7GW offshore wind auction for sites that were not pre-developed by the State.The auction consisted of three sites of 2 GW located in the North Sea (N-11.1, N-12.1, N-12.2) and one site of 1 GW located in the Baltic Sea (O-2.2). The winners were bp for two sites in the North Sea and Total Energies for one site in the North Sea and the site in the Baltic Sea.
bp will lead the development, construction and operations of its fixed-bottom offshore wind projects, with grid connection targeted by end 2030. Initial payments totalling €678 million, equivalent to 10% of the bid amount, will be paid by July 2024. The remaining 90% will be paid over a 20-year period when the projects become operational in the next decade.
TotalEnergies’ concessions will run for a term of 25 years, extendable to 35 years. With capacities of 2 GW and 1 GW respectively. TotalEnergies will pay the German Federal government € 582 million, which will be allocated to the conservation of the marine environment and the promotion of environmentally friendly fishing. An annual contribution will also be paid to the electricity transmission system operators in charge of connecting the projects for 20 years from commissioning of the sites.
For each of the four sites more than one company pledged to build without any state support, triggering an additional “dynamic bidding procedure”. The procedure required developers to enter a second round of uncapped negative bidding. Bids were awarded on the basis of price only.
Negative bidding creates additional costs for offshore wind developers. These costs must be passed on. Either to the supply chain which is already struggling with inflation and surging input costs. Or to the consumers who already face higher electricity prices and costs of living.
Germany will also tender 1.8 GW of offshore wind on centrally pre-developed sites this summer. These sites will be auctioned under a different auction design which includes four non-price criteria: environmental protection, contribution to skilled workforce, CO2 footprint in the production of the wind turbines, existence of PPA contracts. The uncapped “dynamic bidding procedure” will not apply to these sites.
Combining these two offshore wind auctions, Germany will tender a total of 8.8 GW of offshore wind in 2023 - more than its combined installed offshore wind capacity today.