BREAKING: Germany Rakes In EUR 12.6 Billion Through ‘Dynamic Bidding’ Offshore Wind Auction

July 12, 2023, by Adnan Durakovic

Germany’s first dynamic bidding process, covering four offshore wind zones with a combined capacity of 7 GW, has generated EUR 12.6 billion in proceeds, according to the Federal Network Agency.

Illustration; Photo source: TenneT (archive)

The bidding period for the participation in the tenders for the four areas that were not centrally pre-examined ended on 1 June.

The auction entered the dynamic bidding (negative bidding) stage after the Federal Network Agency received eight zero-subsidy bids for the three North Sea areas, and nine zero-subsidy bids for the one Baltic Sea area.

“The results confirm the attractiveness of investments in offshore wind energy in Germany,” said Klaus Müller, President of the Federal Network Agency.

”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.”

The Winners

The subject of the tenders were three areas for offshore wind farms in the North Sea, each with a capacity of 2,000 MW, and one area with a capacity of 1,000 MW in the Baltic Sea.

The N-11.1, N-12.1, and N-12.2 areas in the North Sea are about 120 kilometres northwest of Heligoland, and the area O-2.2 in the Baltic Sea is about 25 kilometres off the island of Rügen. The commissioning of the wind farms is scheduled for 2030.

BP OFW Management 1 GmbH was awarded the contract for the N-11.1 zone with a bid value of 1.83 million EUR/MW (EUR 3.66 billion total), and bp OFW Management 3 GmbH for the N-12.2 zone with a bid of 1.56 million EUR/MW (EUR 3.12 billion total).

Anja-Isabel Dotzenrath, bp’s executive vice president, gas and & low carbon energy, 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 decarbonization.”

North Sea OFW N12-1 GmbH & Co. KG was awarded the rights for the N-12.1 area with a bid value of 1.875 million EUR/MW (EUR 3.75 billion total).

The winner of the O-2.2 area in the Baltic Sea is Baltic Sea OFW O2-2 GmbH & Co. KG with a bid of 2.07 million EUR/MW (EUR 2.07 billion total).

Baltic Sea OFW O2-2 GmbH & Co. KG and North Sea OFW N12-1 GmbH & Co. KG are reportedly special-purpose companies owned by TotalEnergies.

”The successful bidders Bp and Total Energies show their strong commitment to the further expansion of offshore wind energy in Germany. The results of the 7GW auctions underline the great willingness of investors to support the expansion of this established technology. These investments are of enormous importance for the expansion of renewable energies and for achieving the climate policy goals of the German government,” said BWO Managing Director, Stefan Thimm.

”Now we need to create the industrial policy basis so that the winners of the auctions can successfully implement their projects. The high negative bid component puts additional pressure on the value chain. We need, however, appropriate framework conditions to remove the foreseeable bottlenecks in the value chain, such as industrial capacity for the construction of wind turbines, foundations and the installation vessels needed for them.”

With the award, the successful bidders are entitled to the implementation of a planning approval procedure for the construction and operation of wind turbines on the site as well as the right to connection and grid connection capacity, the agency said.

A total of 64 bidding rounds were conducted for N-11.1, 65 bidding rounds for N-12.1, 55 bidding rounds for N-12.2, and 72 bidding rounds for O-2.2, the agency said.

90 per cent of the proceeds will go towards reducing electricity costs, and five per cent each into marine conservation and the promotion of environmentally friendly fishing, the Federal Network Agency said.

The proportions of the bid values awarded for sustainable marine protection must be paid into the federal budget within one year. The electricity cost reduction component is to be paid over a period of 20 years in equal annual installments to the transmission system operator who is obliged to connect, starting with the completion date of the wind farm from 2030.