German offshore wind price

The German Renewable Energy Sources Act (EEG 2014) sets the initial fee for offshore at 15.4 €c/kWh, to be paid for 12 years after commissioning. This amounts to a basic remuneration of 3.9c/kWh. As of 1 January 2018, this amount is subject to a degression of 0.5 €c/kWh each subsequent year.

Operators of offshore plants connected to the grid before 1 January 2020 have the option of the ‘compensation model’. Under this scheme, they receive an increased initial fee of 19.4 €cents per kilowatt-hour in the first eight years after commissioning. The degression of the compensation is 1 €c per kilowatt-hour as of January 1, 2018.

For projects which will come online after 2021, EEG 2021 stipulates that a tendering auction will be held to encourage cost reduction. These tendering rounds began in March 2018. By the end of 2017, there were 3.1 GW of projects awarded for the period 2021-25.

Repowering involves the replacement of old turbines with fewer, larger, taller, and more-efficient and reliable machines. Some operators are switching even relatively new machines for upgraded turbines, including software improvements. The LCOE (levelised cost of energy) of wind energy fell further in 2017, as siting and maintenance know-how improved, turbines became more standardised, and became larger and more efficient.

The Grid Expansion Area Ordinance of the Federal Network Agency covers developments of grid integration in the northern states with offshore wind farms (Schleswig-Holstein, Mecklenburg-Western Pomerania, the northern region of Lower Saxony and the city-states of Bremen and Hamburg). The new tendering system will put limits on further wind development.

The Renewable Energy Sources Act (EEG) 2017 officially changed the system of support from guaranteed feed-in tariffs (FIT’s) to competitive auctions for most renewables installations from 1 January 2017. Operators may obtain funding through winning a competitive auction, bidding for a contract on the basis of the price of the electricity produced. The new tendering system will be fully implemented by 2019, and is expected to encourage citizens’ energy projects. The Offshore Wind Act is part of the EEG 2017 and applies to new offshore wind projects after 2020, and aims for sustainable growth and price reduction. The offshore target is 15 GW by 2030.

The industry is facing the challenge of implementing the competitive tendering system, while being reliant on the grid expansion to take up the intermittent wind power. The turbine export market is also presenting difficulties from competition and inconsistent demand.