Germany's solar auction breaks records again as prices fall

German auctions supporting the construction of solar PV power plants saw a sharp rise in interest last year. The final round of the year, held in December, attracted nearly a fifth more capacity than the previous record auction in July. Increased competition helped push awarded prices down by an average of a fifth compared with the July round. This year, three more auction rounds for ground-mounted solar PV are expected, offering a larger volume than last year.

Germany held three auction rounds last year to support the construction of ground-mounted solar PV plants, the last of them in early December. While the first round of the year saw relatively modest interest, the following rounds attracted a record volume of bids.

Investors’ increased interest in the second half of the year may have been influenced by experience from early last summer, when electricity prices on spot markets collapsed completely due to strong output from solar and wind power plants. By participating in an auction, developers can secure a guaranteed minimum sale price for their projects.

In the second auction round last year, the volume of submitted projects already exceeded the total auction volume by nearly three times. In the final round in December, however, the volume of submitted projects rose by a further roughly 800 MW, or around a fifth. Projects with a combined installed capacity of 5845 MW were submitted to the December auction, in which developers competed for 1611 MW of capacity, according to the regulator, setting a new auction record.

“The latest auction round also set a record: participation in auctions for ground-mounted systems has never been this high. With submitted bids totalling 5.48 GW, the auction volume of 1.61 GW was exceeded by almost three and a half times. Competition led to lower awarded prices,” said Klaus Müller, president of Germany’s Federal Network Agency (Bundesnetzagentur).

According to the regulator, 124 projects with a total installed capacity of 1613 MW were successful in the auction. Awarded prices ranged from 44.4 to 54.7 EUR/MWh, with a weighted average of 51.7 EUR/MWh. This represents a nearly 20% decrease compared with the previous round in July last year.

Regionally, projects in Bavaria (604 MW) were traditionally the most successful, followed by Brandenburg (197 MW) and Saxony-Anhalt (167 MW).