Berlin awards 807MW onshore

Germany has awarded 807MW of onshore wind capacity to 70 projects in an auction under the country’s new renewable energy rules.

The Ministry for Economic Affairs and Energy said the average auction price was 5.71 euro cents per kilowatt hour (kWh), with prices ranging from 5.25 cents/kWh to 5.78/kWh.

Some 256 bids were received representing total volume of almost 2.4GW, it added.

Of the 70 successful projects, 65 are community-driven or co-operative wind projects.

Special rules apply to community-driven and co-operative wind farms, including having more time to be completed – 54 months compared with 30 for other projects.

They were also allowed to participate in the auction before being granted a building license.

Community projects also have uniform pricing under the auction rules. The price was 5.58 cents a kWh in so-called grid bottleneck areas in the wind-prone regions of Northern Germany. The price outside these areas was 5.78 cents a kWh.

For all other projects ‘pay-bid-rules’ apply, with 5.58 cents a kWh the highest bid in grid bottleneck areas and 5.71 cents kWh the highest in other areas.

Some 258MW was allocated to projects in the grid bottleneck areas.

Germany plans to allocate support for 2.8GW in new onshore wind projects annually through tenders from 2017 through 2019, followed by an annual 2.9GW from 2020 on.

Law firm Norton Rose Fulbright head of energy Klaus Bader said: “Few participants expected an average bid price substantially below six cents per kWh.

“A reduction to 5.71 cents per kWh compared with the previous 8.03 cents per kWh under the previous (feed-in tariff) system will have an enormous impact on the economics of a wind farm.”

He said that for a wind farm investor to achieve an internal rate of return of 5% compared with the previous regime, the total cost of a standard German onshore wind farm would need to be reduced by about one-third.

“This difference has to be shaved off somewhere, whether that is through a reduction of the developer margin, turbine price, cost of operation or financing costs.

“Otherwise an investor fundamentally has to accept lower returns on their investment.”

Image: Pixabay