Biomass auction electricity prices in Germany remain twice market levels

Germany has held two rounds of auctions this year to support plants burning biomass, with strong investor interest in both. The German network regulator published the results of the second round early this month; it took place at the beginning of October. Despite the auction volume being several times higher than in the previous round, all the capacity on offer was awarded this time as well. The awarded prices rose compared with the first round this year and are roughly double the levels at which base contracts for the coming years trade in Germany.

As in previous years, Germany held two separate rounds this year to support biomass-fired plants. The second round took place at the beginning of October and according to the German network regulator, it was the first biomass auction since the adoption of a new legislative package. Before the auction, the European Commission had also approved new conditions for public support for biomass plants in Germany, according to the regulator.

Only highly flexible plants will now be eligible for support, and they will be incentivized to respond to market signals. This step should help improve the integration of additional solar and wind power plants into the German market.

The second round this year also offered significantly more capacity for bidding than previous rounds. While these auctions typically offered between 250 and 300 MW of capacity in previous years, and the first round this year was limited to just 187 MW, the second round this year opened the way for support for projects with more than 800 MW of installed capacity.

Developers submitted more than 800 bids for plants with a total capacity of 940 MW. A total of 692 projects were successful in the auction, of which just 33 bids (63 MW) were for new plants, while the remaining 659 successful bids (752 MW) were for existing plants.

According to the German regulator, awarded prices ranged from 110 to 194.8 EUR/MWh, with a weighted average of 181,1EUR/MWh. Meanwhile, electricity prices for baseload delivery in the coming years are around 80 to 90 EUR/MWh in Germany.