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Searching for the Perfect System

In an increasing number of countries, projects for the expansion of renewable energies are awarded in tendering procedures that vary from region to region. At the moment, however, one thing seems to be clear: no country has yet found the perfect system. Instead, experiments are carried out everywhere, new rules tested and improved afterwards.

Image: PixabayImage: Pixabay

In Germany, where auctions for onshore wind energy were held for the first time last year, it quickly became clear that although the idea of promoting community wind projects was well-intentioned, its implementation in the law ("EEG") was inadequate and had serious consequences for professional project developers. With a few exceptions, they were completely left empty in the first bidding rounds, as they had to calculate current prices on the basis of a permit under the Federal Immission Control Act. Citizen wind-driven projects on the other hand were able to file for reduced prices as they didn't need the corresponding permit and had a longer period of time to actually build the projects in the hope of further cost reduction in the meantime.

After massive criticism from the industry, politicians reacted and changed the conditions for participation in the auctions in 2018. In any case, the results of the first round in 2018 - participation was only possible with already granted approval - have already been well received by professional project developers. The readjustment of the EEG resulted in more realistic project prices being possible again.

Image: K. Radtke

"The declining number of bids shows that the calls for tenders for wind turbines are not a no-brainer," said Jochen Homann, President of the Federal Network Agency, when announcing the results. "The increase in the price to 4.6 cents makes it clear that in previous bids, without approval and realization periods of 4.5 years, technology and price developments were assumed to be different from those of bids with approvals and realization periods of 2.5 years."

The second auction this year is currently running for a volume of just under 700 megawatts. Bids can still be submitted until 1 May.

In Italy, too, several hundred megawatts of power are to be awarded by auction this year as the Italian government has announced recently. In the future, there will also be calls for tenders open to technology, i. e. mixed solar and wind power tenders for projects with a capacity of more than 1 MW. Smaller output quantities are awarded in separate procedures, as the PV Magazine reports.

Over the next two years, a total of around 4.8 gigawatts are to be auctioned off for major-sized projects. In view of the fact that open-technology tenders are also pending in Germany in the future, the focus of interest is likely to be on how the relationship between solar and wind power plants will develop. Which technology is more likely to prevail in this system in the long term?

Meanwhile, completely different problems are emerging in France. As early as 2012 and 2014, approximately 3 gigawatts were awarded for offshore wind farms by tender. However, so far none of the projects have made it into the construction phase, although the wind farms should actually start operating soon. In the meantime, other countries have long since outpaced the French.

Countries such as Great Britain, Germany, Denmark and the Netherlands have massively advanced their offshore industries. As a result, prices for offshore electricity also fell significantly. Research has also continued to drive down costs with various technical innovations, which were unthinkable in France at the time when the contracts were awarded.

The news agency Reuters reports, citing French medium Les Echos, that the French government is no longer happy with the prices of around 200 euros per MWh. Since then, the prices for offshore wind energy have more than halved, so that the French energy regulator CRE criticises the high costs of the planned subsidies (right picture: M. Tschierschke). Therefore, they want to renegotiate the conditions. If this is not possible, the government seems to be thinking about cancelling the projects and launching new calls for tenders.

However, the first experts are already warning against this scenario, which could send a bad signal to the entire industry. As the example of Spain has shown, nothing is as poisonous to the industry as ever-changing political conditions.

Katrin Radtke
tender, auction, onshore, offshore, Germany, Italy, France, Spain, system

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