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Germany’s auction awards DONG Energy with first subsidy-free offshore wind project

Germany’s first competitive auction for offshore wind projects awarded one of the world’s first subsidy-free offshore wind project. The lowest price bid was 0.00 ct/kWh and the highest accepted was 6.00 ct/kWh with an average award price of 0.44 ct/kWh. 

"The average weighted award price of 0.44 cents per kilowatt hour is far below expectations. This shows the auction has unlocked medium and long-term cost reduction potential, which will lead to a reduction in funding to an extent that had not been expected" said Jochen Homann, Bundesnetzagentur President.

Winning projects will be granted funding under the Renewable Energy Sources Act and the grid connection will be financed through the network charges by the electricity consumers. They will also have the possibility to operate the wind farms for 25 years.

The second auction will take place on April 1st 2018 with total volume of 1,610 MW, including a minimum of 500 MW to be awarded for offshore wind farms in the Baltic Sea. You can read more about it here

Dong Energy was granted with the right to build three offshore wind project with a total capacity of 590 MW in the German North Sea: OWP West (240 MW), Borkum Riffgrund West 2 (240 MW) and Gode Wind 3 (110 MW). The projects are expected to be commissioned in 2024. 

Samuel Leupold, Executive Vice President and CEO of Wind Power at DONG Energy, says: “We’re pleased with being awarded three projects in the first of two German auction rounds, and we have good opportunities to add further capacity to our winning projects in next year’s German auction. Today’s results contribute to our ambition of driving profitable growth by adding approximately 5GW of additional capacity by 2025.”

Two projects (OWP West and Borkum Riffgrund West 2) will not receive a subsidy on top of the wholesale electricity price, since DONG Energy made bids at 0€ per MWh. The Gode Wind 3 project bid price was of 60€ per MWh.

Cost-drivers to enable 0€ bid were platform changes (with significantly bigger turbines), increasing electricity production, combined large-scale projects, the location (the projects benefit from average wind speeds of more than 10 m/s), extended lifetime (from 25 to 30 years) and the fact that the grid connection is not included in the bid price. 

EnBW was granted with the fourth winning project - 900 MW He Dreiht offshore wind farm. It was the largest single project in the competitive auction, scheduled to be commissioned in 2025. 

To develop a wind offshore project, thorough knowledge of metocean conditions are necessary to reduce costs and improve efficiency. With that in mind, Open Ocean has conceived and developed Metocean Analytics and Metocean Discover, online tools providing metocean studies based on historical waves, currents, wind and ocean temperature datasets covering the whole globe.

To know more about Metocean Analytics and Metocean Discover, please contact us and ask for a demo. 

Dong Energy