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German Grid Agency Raises Wind Power Auction Prices To Avoid ‘Rupture’

Clean Energy Wire

Maximum support rate for onshore wind raised to ensure continuous expansion

The maximum support rate for onshore wind power installations in Germany’s renewables auctions scheme has been raised to 6.3 cents per kilowatt hour to ensure competition among bidders and a continuous expansion of the energy source, the Federal Grid Agency (BNetzA) says in a press release. Without the raise, the maximum support rate would have had to be derived from the results of previous auctions. These were dominated by citizen energy projects with long implementation periods which based their bids on projected future input prices that do not necessarily reflect current cost levels, the BNetzA says. The support rate in this case would now stand at 5cts/kWh, less than the current energy generation costs for onshore wind power of 5.6cts/kWh, which might have led to a situation in which not enough bidders compete in the next auction to exhaust the entire tendered volume. “The increase of the maximum price allows for a healthy competition in 2018,” BNetzA head Jochen Homann said. “Bidders can submit price levels that enable them to operate the installations at a profit.”

Raise of maximum support rate for onshore wind power auctions “a necessary correction”

The decision by Germany’s Federal Grid Agency (BNetzA) to increase the maximum support rate for onshore windpower installations in renewables auctions to 6.3 cents per kilowatt hour was “a first step to correct undesired developments” in the tender system, Hermann Albers, head of the German Wind Energy Association (BWE), says. The move was necessary to avoid a “rupture” in expansion of the energy source as bidders could now be sure to operate their installations at a profit. This is because  the original price that would have been derived from previous auction results is lower than current energy generation costs for onshore wind power, the BWE says. The reason for this is that citizen energy projects in the tenders are allowed to submit bids for projects that will only be implemented about four years later, which enables them to speculate on price drops in the future, the lobby group says.  The German Association of Energy and Water Industries (BDEW) says that the increase was “a necessary correction” to the current auction system. The special rules for citizen projects led to “market distortion”, which warranted an amendment in the Renewable Energy Act that obliges citizen projects to abide by the same licensing and implementation rules as their competitors, BDEW head Stefan Kapferer said.

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