The new German Offshore Wind Act
Offshore wind energy production has been an ever-growing business in Germany for the last few years. The German government was keen to subsidise the business in order to reach their goal to eventually switch to renewable energy sources as Germany's sole power source.
However, over the last few of years and with the introduction of the newest amendment to the applicable law ("Gesetz zur Einführung von Ausschreibungen für Strom aus erneuerbaren Energien und zu weiteren Änderungen des Rechts der erneuerbaren Energien", abbreviated EEG"), these subsidies have been gradually reduces in order to manage the growth of the industry.
With the additional introduction of the separate Offshore Wind Act ("Gesetz zur Entwicklung und Förderung der Windenergie auf See"), also referred to as "WindSeeG", not only is there an annual cap on construction permits but also a competitive auction system favouring operators offering to sell their wind power at the lowest price.
More than two years after its introduction, the transitional period of the Offshore Wind Act has passed and the so-called central model of the auction system is now fully in place. In the following, we will shortly describe this central model and the expected developments due to the outcome of the two auction rounds during the transitional period.
The auction system under the central model
The fully implemented central model provides that prospective developers of an offshore wind park must bid against other potential investors in order to receive a planning permission. The German Federal Maritime and Hydrographic Agency ("Bundesamt für Seeschifffahrt und Hydrographie"), also referred to as "BSH" will conduct its own preliminary site investigations and suitability testing, before approving a certain site or area in the North or Baltic Sea for the planning of an offshore wind farm. Approved sites will be included in the auctions, with an annual capacity to be auctioned of 700 to 900 MW (no more than 840 MW on average).
Bidders will need to specify for what capacity amount they are bidding, but the actual bidding is made on the "reference value", i.e. the base amount for the guaranteed grid supply compensation. The bidder with the lowest reference value bid will receive the auction award. If two or more bidders make this lowest reference value bid, the bidder with the smaller capacity bid will receive the award.
In order to place a valid bid, the bidder must also...