German wind auctions push price below EUR 50/MWh for first time since 2018

The average price of winning bids in the latest German onshore wind tender fell to EUR 47.90/MWh, the lowest level in eight years. The auction attracted bids for projects with a combined installed capacity of 5.3 GW, while projects totalling 2.5 GW were awarded support. Developers may be motivated to participate by efforts to secure support before a planned reform of grid connection rules. Critics say this could negatively affect the economics of new onshore projects in Germany.

The latest German auction for operating support for new onshore wind farms saw significant oversubscription. The result is the lowest average awarded price in eight years. The final average price was pushed below EUR 50, falling to EUR 47.90/MWh.

Although the total volume of bids submitted declined compared with the previous round, the high number of applicants resulted in a further reduction in awarded prices, according to Klaus Müller, president of the federal agency BNetzA.

The agency allocated support for 2.5 GW of new projects in the latest tender. Projects with a combined capacity of 5.3 GW were submitted.

The result confirmed the trend of falling prices in German wind auctions. The previous auction had already approached the EUR 50/MWh threshold, with the final average price reaching EUR 50.60/MWh. Increased competition has recently been putting pressure on developers' margins in Germany's wind sector.

Expected reform of grid legislation

One factor behind the higher number of auction participants is the planned reform of German grid legislation, which is due to enter into force next year. Among other things, it is intended to significantly limit compensation payments made to developers in so-called areas with constrained grid capacity.

Power plant operators have so far received compensation for lost revenue in cases of local grid congestion and the necessary curtailment of their generation. Under the new rules, operators of onshore wind and solar plants will have to accept curtailment without compensation for up to 20% of annual generation in these areas.

The planned proposal is therefore putting pressure on developers to secure support for projects before the legislation potentially enters into force. The reform is also expected to bring greater consistency to determining the order in which new projects are connected to the grid. This should primarily take into account a project's actual readiness for commissioning, as well as the practical ability of the system to accommodate the new source.

Industry representatives are warning the German government that abolishing the payments mentioned above will reverse the current trend of rapid wind power expansion in Europe's largest economy.

Average prices in German auctions last fell below EUR 50/MWh in February 2018, when support for 709 MW of capacity was awarded at EUR 47.30/MWh. The average price of winning bids reached its historic low in November 2017, at EUR 38.20/MWh. Conversely, the price reached its maximum level of EUR 73.40/MWh three times: in February and May 2023 and again in February 2025.