Germany pondering ‘negative bidding’ in offshore wind, WindEurope warns about consequences

Germany is looking to introduce the so-called “negative bidding” for some of its new offshore wind auctions, according to WindEurope, which warned about the effects this approach could have on consumers and the supply chain.

Inspired by Denmark, whose Thor offshore wind auction used negative bidding and RWE is paying the government EUR 375 million for the right to develop the project, Germany is now also considering a similar approach, the European wind energy industry association said.

Furthermore, in its current offshore wind auction, the Netherlands has invited bidders to pay EUR 50 million and they will score less if they do not, WindEurope said, adding that governments may be tempted to make money in these ways, but that they need to remember that this imposes additional costs on those developing wind farms.

“Negative bidding in wind auctions creates additional costs that have to be passed on to someone. To energy consumers who are already struggling with higher bills. And/or to the wind supply wind chain, which is already operating at a loss. Either way it’s a straw to break a camel’s back. It might look like a gain for finance ministries. It’s a huge cost for society. Don’t do it”, said WindEurope CEO Giles Dickson.

Upcoming offshore wind auctions in Germany could also include other new criteria, such as CO2 footprint since, according to the German Tagesspiegel Background, the federal states and industry associations are calling for the level of emissions of an offshore wind farm to be introduced as a criterion. 

Germany has 7,770 MW of installed offshore wind capacity and is the third in the world in this regard, behind China and the UK. In 2020, the country added 219 MW of offshore wind capacity and last year, for the first time in more than ten years, it did not install a single offshore wind turbine.

At the beginning of this year, the Federal Maritime and Hydrographic Agency (BSH) approved three areas in the German exclusive economic zone of the North Sea for the development of offshore wind farms. These will be auctioned this and next year.

The country raised its offshore wind targets last year and, last month, the German government announced it was changing offshore wind legislation to reach the new targets of 30 GW of operational offshore wind by 2030, 40 GW by 2035, and at least 70 GW by 2045.