Industry Spotlights DONG, EnBW Game-Changers

After the latest German offshore wind tender resulted in EnBW and DONG Energy announcing the world’s first subsidy-free offshore wind farms, the industry welcomed the news and the direction these tender results set for the sector.

Namely, three out of the four awarded projects will not require subsidy on top of the wholesale electricity price: EnBW’s 900MW He Dreiht, and DONG Energy’s 240MW OWP West and 240MW Borkum Riffgrund West 2. The fourth project awarded, DONG’s Gode Wind 3, had a bid price of EUR 60 per MWh.

Consequently, the industry hailed the new achievement that raises the bar, not forgetting to mention last year’s milestones in Denmark and the Netherlands.

Following German tender awards on 13 April, the renewable energy financial advisory company, Green Giraffe, stated: “The just-released results of the first offshore wind German auction show the vastly improved competitiveness of offshore wind and underline that the prices reached in recent Dutch and Danish tenders were no flukes.

“Offshore wind is now that rare breed: a power generation technology with investors willing to build new plants today without any price support mechanism whatsoever. The future for nuclear and fossil-fuel plants will be bleak as these results sink in. We hate the phrase ‘game changer’ but this truly is one. Suddenly the market became 20 times bigger!”

Commenting on the results, WindEurope CEO Giles Dickson said: “The result of the first offshore auction in Germany is excellent news. For the offshore industry and for energy consumers. It proves that the trend towards cost reduction in offshore wind continues. And that record-breaking bids in Denmark and the Netherlands in 2016 were no exceptional cases.

Government schemes for offshore wind like in Germany have been instrumental to reduce costs. They have allowed the industry to mature and accelerate its learning curve. And by providing stable revenues to operators of offshore wind farms, financing costs were cut to a minimum.

The 900 MW He Dreiht offshore wind farm will be built and operated by EnBW without government support. That’s a first and thus another game-changer. It shows that offshore wind is now on a par with conventional power generation.

Some challenges remain. Germany needs to intensify its work on grid expansion, in particular onshore. On a European level, overcapacity needs to be tackled to re-establish long-term price signals for investors.

And above all, we need governments to provide the industry with clarity on their post-2020 offshore wind plans. Despite having delivered cost reductions ahead of its self-imposed schedule, the industry needs at least 4 GW/year after 2020 to continue reducing costs. If countries want to capitalise on the development of a competitive, clean and job creating wind energy sector, they need to make a clear commitment on future volumes.”