German regulator Bnetza has completed its first tender for offshore wind projects, with one successful project bidding at zero.
Four projects with a total capacity of 1,490MW were successful in the auction, Bnetza said.
One successful bid — from EnBW for its 900MW He Dreiht offshore wind project — was at zero, meaning the project will not receive subsidies under Germany's renewable energy law (EEG).
The highest successful bid was at €60/MWh ($63.72/MWh), while the weighted average price of successful bids was just €4.40/MWh. Successful bidders receive market premiums corresponding to the level of their individual bids, and also receive grid connection.
EnBW said that this will be one of the first offshore wind farms in the world without state subsidies. Chief executive Frank Mastiaux said this shows offshore wind has made a "quantum leap in terms of efficiency" and that "integrating offshore technology into the market by the middle of the next decade is possible."
EnBW said the project benefited from scale and synergy. It was the largest project in the auction, and is located close to two other EnBW wind projects in the North Sea — the 497MW Hohe See and the 116MW Albatros farms — both of which are expected to be commissioned by 2019.
And as the project will not come online until 2025, it will benefit from rapidly advancing technological developments, EnBW said.
The anticipated returns from the farm "are considerably above our capital costs and thus remain attractive", Dirk Gusewell, head of renewable energy at EnBW, said.
Danish energy firm Dong Energy owns the other successful projects in the auction — Borkum Riffgrund West 2, Gode Wind 3 and OWP West.
All the projects are located in the North Sea.
This is the first of two auctions for capacity coming online in 2021-25. A total of 1,550MW was planned to be awarded in each auction.
Because capacity awarded at the first auction fell 60MW short of this goal, a total of 1,610MW will be awarded in the second auction in 2018. A total of 500MW of capacity awarded in the second auction must be based in the Baltic Sea.
Bnetza president Jochen Homann said the average price in the auction was far below expectations, and the auction "has unlocked medium and long-term cost reduction potential." But he said "it remains to be seen... whether the prices in the next auction will be as low."
Germany has around 4.4GW of installed offshore wind capacity, which is expected to rise to 7.7GW by 2020, 10.8GW by 2025 and 15GW by 2030.
