BP and TotalEneriges have won development rights for four sites in the 7GW German dynamic tender round with combined bids of over €12 billion.
The UK oil and gas giant has secured two North Sea zones, N-12.2 and N-11.1, both totalling 2GW each and located between 130km an 150km off the coast.
BP bid €1.83m per megawatt for the latter, or €3.66 billion, and €1.56m/MW for the former zone, totalling €3.12 billion, according to federal network agency BNetzA.
The company said the awards are “fully aligned with (its) integrated energy company strategy and disciplined capital allocation”. Initial payments totalling €678m, 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.
Executive vice president of gas and & low carbon energy Anja-Isabel Dotzenrath (pictured) said: “These awards are a huge milestone for BP’s decarbonization plans in Germany and are a strong reflection of our wider strategy.
“The renewable power we aim to produce will anchor the significant demand we expect for green electrons for our German operations, from a whole host of products and services including green hydrogen and biofuels production, electric mobility growth and refinery decarbonisation.
“Germany is a core market for bp and we are excited to continue and grow our business here. The investment is fully aligned with our integrated energy strategy and is accommodated within our disciplined capital frame. Expected returns of 6-8% are consistent with our renewables and power growth engine on an unlevered basis, with the potential to realise enhanced value through integration across the Germany value chain.”
The two other sites have been secured by TotalEnergies, the 2GW N-12.1 site in the North Sea with a bid of €1.86m/MW, totalling €3.12bn, and 1GW O-2.2 in the Baltic Sea site with a bid value of €2.07m/MW, equating to €2.07bn.
The French oil major said production generated by these sites will be marketed either by selling it directly on the electricity market, or by concluding power purchase agreements (PPA) with end buyers.
“These projects, at competitive costs given the quality of the sites, are part of the company’s strategy to become an integrated player in the electricity markets taking advantage of price volatility and will contribute to achieving the profitability objectives two figures from the Business Unit Integrated Power,” it said.
“Our entry into offshore wind power in Germany , the largest electricity market in Europe, is a key step in the implementation of our strategy to become a profitable integrated player in the electricity markets. After the availability of a floating LNG regasification unit in Lubmin terminal in January 2023, this is a new commitment from TotalEnergies to deploy our multi-energy strategy in Germany and contribute to the country’s and Europe’s energy security,” said chief executive Patrick Pouyanné.
The successful bidders are entitled to the implementation of a planning approval procedure for the construction and operation of turbines at the sites as well as the right to connection and grid connection capacity, according to BNetzA.
The agency said it was necessary to carry out the dynamic bidding process because eight bids were submitted for the North Sea areas and nine bids for the Baltic Sea area with a bid value of zero cents per kilowatt hour.
“The aim of the dynamic bidding process is the competitive differentiation of the bids when there are several zero-cent bids for an area. The bidders with the highest willingness to pay for an area were awarded the contract,” said the agency.
The determination of the eligible bidders took place online in several bidding rounds with increasing bid levels. Several bidding rounds were carried out per day.
A total of 64 bidding rounds were conducted for site N-11.1, 65 bidding rounds for site N-12.1, 55 bidding rounds for site N-12.2 and 72 bidding rounds for site O-2.2.
“The results confirm the attractiveness of investments in offshore wind energy in Germany,” said Klaus Müller, BNetzA president.
“The competition for offshore wind energy is higher than ever. The results are an important step towards achieving the offshore expansion target of 30 GW by 2030.”