The German federal council or Bundesrat has rejected proposals for a second bid component for offshore wind auctions in Germany.
The Bundesrat is the legislative body that represents the 16 Lander or regions of Germany at the federal level.
Germany’s federal association of offshore wind farm operators BWO welcomed the decision.
It said the second bid component proposed by the federal Ministry of Economics would have resulted in “massive risk premiums and rising electricity prices”.
BWO managing director Stefan Thimm said: “We welcome the decision of the Federal Council to discourage the planned second bid component for the tender for offshore wind energy.
“The decision of the Federal Council is groundbreaking. Right now it has to be about creating astable economic conditions and cushioning the consequences of the corona pandemic.
“The federal council has recognised that contracts for difference are the economically more efficient model here.
“Our European neighbours have already shown that contracts for differences increase the economic predictability of offshore projects and not only contribute to a long-term reduction in the cost of electricity, but also make a significant contribution to maintaining the diversity of actors.”
Vattenfall head of the wind Gunnar Groebler said the council’s decision to reject the dynamic bidding process is a “strong signal for the rapid expansion of offshore wind energy in Germany, which we expressly welcome”.
He added the federal government should follow and reject the proposals.
“Together with the industry and numerous associations, we therefore continue to suggest switching to the contracts for difference model instead.”