EU Approves Germany’s New Offshore Wind Capacity Targets, Tendering Procedures

December 22, 2022, by Adnan Durakovic

The European Commission has approved, under EU State aid rules, the amendments to the German Offshore Wind Energy Act (WindSeeG).

Illustration; Borkum Riffgrund 2 offshore wind farm in Germany; Photo source: Ørsted

The approved amendments, with a total budget of EUR 1.5 billion, include an increase of expansion targets for installed capacity of offshore wind energy installations from 20 GW to at least 30 GW by 2030; to at least 40 GW by 2035; and from 40 GW to at least 70 GW by 2040.

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Germany will also implement a new tender procedure for a different type of sites in the German Exclusive Economic Zone, allowing offshore wind electricity producers to bid for sites that have not been centrally pre-investigated by the German government. With this new procedure, Germany expects to increase and speed up offshore wind development.

The amendments also included a dynamic bidding procedure for tenders for non-centrally pre-investigated sites, which will allow Germany to differentiate and select between multiple bids with a bid value of zero.

The amended scheme will continue to be applicable until the end of 2026.

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The Commission assessed the amended scheme under EU State aid rules, in particular the 2022 Guidelines on State aid for climate, environmental protection and energy (CEEAG) that apply since January 2022.

The Commission found that the measure continues to be necessary and appropriate to promote the use of renewable energy sources and to reduce greenhouse gas emissions.

Furthermore, the Commission found that the aid is proportionate and limited to the minimum necessary. The Commission also found that the positive effects of the scheme, in particular the environmental ones, outweigh any possible negative effects in terms of distortions to competition. In particular, the aid is granted through a premium on top of the electricity market price, based on the lowest bids in an open and transparent bidding process. The aid is limited to a maximum defined by the funding gap, which is the amount needed to develop projects.

In line with the evaluation requirement envisaged by the CEEAG, Germany has developed a detailed plan for the independent economic evaluation of the scheme and has committed to improve the data gathering and the use of empirical methodologies in this respect, the Commission said.

On this basis, the Commission approved the amended German scheme under EU State aid rules.

”The amended scheme approved today is a very good example of how EU State aid rules enable Member States to support green energy projects, such as offshore wind energy generation. It will contribute to achieving the EU Green Deal’s ambitious energy and climate targets, without unduly distorting competition in the Single Market,” Margrethe Vestager, the European Commission’s Executive Vice-President in charge of competition policy, said.