Mercedes-Benz, Amazon, Frankfurt Airport, Lidl & Kaufland, Vodafone – Giants in Germany lining up to buy offshore wind power

With the latest news about Lidl and Kaufland entering a long-term offshore wind power offtake contract, and Mercedes-Benz announcing the same shortly prior to that, the list of big names signing up to buy offshore wind-generated electricity in Germany keeps growing. What lies behind this are both the companies’ ambitious decarbonisation strategies and the country’s approach to tendering.

A number of prominent companies and conglomerates in Germany, most of which operate globally, have entered offshore wind power offtake agreements over the past few years.

For each of these businesses, the move is part of a net-zero strategy. Alongside this, the scope of long-term power purchase agreements (PPAs) with third parties is a qualitative award criterion in some parts of the German tendering system, according to WAB, the German offshore wind and hydrogen association.

As reported by our sibling site offshoreWIND.biz on 5 April, Lidl and Kaufland, the retail divisions of the German Schwarz Group, signed a long-term PPA this month with RWE Supply & Trading for the Kaskasi offshore wind farm, which started officially operating last month.

For the 342 MW Kaskasi, located 35 kilometres off the coast of Heligoland in the North Sea, Lidl and Kaufland signed a ten-year agreement that will go into effect in 2028. During this time, the two will be offtaking around 250 GWh of electricity per year.

Earlier this year, RWE signed power offtake contracts with eleven German industrial clients and one large municipal utility for green electricity generated by its Nordsee Ost and Amrumbank West offshore wind farms.

Under the agreements, Badische Stahlwerke, Freudenberg Group, Infraserv Höchst, Mainova, Messer, Schott, Telefónica, Verallia, Vodafone, Wacker and ZF will be using the offshore wind power, starting in 2025 or 2026, with the majority of the contracts to run for ten years.

With these PPAs, all of the electricity generated by Nordsee Ost and Amrumbank West from 2026 has been sold under contract as Deutsche Bahn also signed PPAs for the two offshore wind farms with RWE in 2019, 2020, and 2021.

Just days before Schwarz Group announced the PPA with RWE on 5 April, Mercedes-Benz and Iberdrola revealed a PPA for the new, 315 MW offshore wind farm Windanker in the German part of the Baltic Sea.

With the contract, Mercedes-Benz secured more than 140 MW of Windanker’s total generation capacity, which it plans on using from 2027 onwards.

Only a day earlier, the Spain-based offshore wind developer announced that it signed a collaboration agreement with Amazon which includes power purchase agreements for Iberdrola’s Windanker and Baltic Eagle offshore wind farms in Germany.

Also in March, German offshore wind developer EnBW signed a PPA for 50 MW of power from the He Dreiht offshore wind farm with the technology and services company Bosch (Robert Bosch GmbH).

With 50 MW, Bosch will offtake around 200 GWh of electricity per year for 15 years starting in 2026.

EnBW has signed a few more power offtake deals for the 900 MW He Dreiht, for which it reached the final investment decision (FID) last month, including a 15-year agreement with Frankfurt Airport’s operator Fraport, signed in 2021.

Under the long-term contract that comes into force in the second half of 2026, Fraport booked 85 MW from the subsidy-free offshore wind farm, set to be built some 90 kilometres northwest of the island of Borkum.

The proliferation of power purchase agreements for offshore wind projects in Germany is a result of the companies’ internal net-zero and decarbonisation strategies.

At Mercedes-Benz, for example, the offshore wind power the car manufacturer will be buying will be used at its facilities in Germany as the company aims to halve passenger/car emissions by 2030, compared to 2020 levels.

“Renewable energy supply is an important lever for reducing CO2 emissions throughout the global production network of Mercedes-Benz and for our entire company. By partnering with Iberdrola, we are taking an important step to further secure our green energy capacity for the future. We are thus underpinning our comprehensive claim to be a sustainable pioneer and at the same time our intention to play an active role in shaping the energy transition“, said Jörg Burzer, Member of the Board of Management of Mercedes-Benz Group AG, Production and Supply Chain Management.

Schwarz Group, whose Lidl and Kaufland represent the first corporate customers to conclude a PPA for RWE’s Kaskasi offshore wind farm, said that purchasing green electricity was just one of the measures that contribute to the joint climate strategy of its companies and to helping to save 55 per cent of CO2 by 2030.

Through the strategy, the Schwarz Group companies have set goals based on the methodology of the Science Based Targets Initiative (SBTi) and implemented measures to reduce, avoid or offset CO2 emissions in both operations and the supply chain.

To achieve avoiding CO2 and other greenhouse gas emissions, the companies have been sourcing their electricity 100 per cent from renewable energies since the 2022 financial year, with another source of green electricity now being added through the ten-year contract with RWE, according to the parent company.

Back in 2021, Fraport said that offshore wind-generated electricity would help transition a substantial portion of electricity consumption at its Frankfurt Airport home base to green energy.

In 2021, Fraport CEO Stefan Schulte said the PPA for He Dreiht marked a key milestone in Fraport’s ongoing decarbonisation strategy.

”Renewables such as wind and solar are the focus of our climate strategy. They provide the firm foundations for a comprehensive package of measures to systematically reduce our CO2 emissions. Our clearly defined goal is to make Frankfurt Airport carbon-free by 2045. The power sourced from this new offshore wind park will play a central role”, Schulte said.

“As an airport operator, we are especially reliant on a dependable, stable source of power that can be scaled up to meet our growing needs. In EnBW, we have found a strong partner. Compared with the conventional energy sources on which we have previously depended, the new CPPA unlocks potential savings of up to 80,000 tonnes of carbon dioxide per year”.

Still, the pool of business giants in Germany who are buying offshore wind power is growing thanks to the German tendering system as much as it is due to companies’ net-zero ambitions.

“The scope of long-term power deliveries to third parties is a qualitative award criterion in Germany for the bids until August 1, 2023 for a total of 1,800 MW on four centrally pre-screened areas in the North Sea and, in terms of sustainable offshore wind development, is significantly more advantageous to the dynamic bidding process of the tender for the non-centrally pre-screened areas in the North Sea and Baltic Sea”, Heike Winkler, Managing Director at WAB, told offshoreWIND.biz.

This approach reduces the exposure to volatility of market prices, helps decarbonise energy-intensive industry and promotes energy-efficient use of space in the North and Baltic Seas, according to Winkler, who added that qualitative criteria were the future for a cost- and energy-efficient and for a sustainable, as well as value-creation-supporting, allocation of offshore areas.

“Offshore wind is already very cost-efficient compared to fossil energy supply even cheap, but it is not cost-free. Innovation, industrial value creation for climate protection, security of supply and energy sovereignty must be financed in order to be implemented rapidly enough. The costs on the part of the supplier industry must be covered in order to enable innovative advanced developments. Energy-intensive industry needs assured availability of green power”, Heike Winkler said.