Negative bidding could have a detrimental impact on Germany’s offshore wind sector, according to trade body WindEurope.
The German government is currently reviewing different auction designs for offshore wind and should consider a two-sided Contracts for Difference (CfD) regime, WindEurope said.
“Governmental considerations around negative bidding in offshore auctions could endanger Germany’s continuous expansion of offshore wind, threatening its climate and renewable energy targets,” said WindEurope chief executive Giles Dickson.
“Negative pricing is likely to deter investors, push up financing costs and increase the pressure on the already struggling supply chain,” he said.
“No other country in Europe is seriously considering negative pricing. A number of countries, however, are moving towards CfD,” Dickson added.
With CfD wind farms pay back, when the market price exceeds the auction price, the trade body said.
“Government and consumers would pay much less overall than they do in the current system,” said Dickson.
“And the financing costs are much lower (2.5 percentage points) than with ‘zero subsidy’ bidding,” he added.
The German Ministry for Economic Affairs and Energy is meeting with industry representatives today to discuss how to deliver the planned new 20GW target for offshore wind by 2030.
Germany now has an opportunity to put offshore wind back on track and could comfortably deliver 20GW by 2030, said WindEurope.
Dickson said: “Other countries in Europe, such as Denmark, the Netherlands or UK, have defined their 2030 targets for offshore wind, and they’ve all gone for ambitious volumes. Germany will be less attractive to investors if they don’t raise their expansion target.”