Germany's wind power goals still threatened by a shortage of projects

Although the situation in Germany regarding the severe shortage of wind power projects is gradually improving, the battle is far from won. The country's first onshore wind auction of the year was held in early February, but once again there were not enough projects. Germany has ambitious plans for wind power, and auctions are the main support mechanism. Projects are still in short supply, however, which meant that only half of the originally planned volume was awarded last year.

Germany has been struggling with a shortage of wind power projects for several years, negatively affecting competition in its auctions. After initial enthusiasm in 2017, the situation quickly reversed and has been entirely different since the second half of 2018. Since then, the lack of projects in auctions has meant there has been no competitive pressure, allowing investors to routinely secure prices close to the maximum levels set by the regulator for each auction.

The German government has tried to address this problem by significantly increasing the maximum prices investors can bid in auctions. These have risen by 25% since last year, which appears to have attracted more investors, but the auctions are still not filling up. In anticipation of a shortage of projects, the German regulator therefore routinely reduces auction volumes. While the original plan for last year was to offer nearly 13 GW of capacity in four auctions, their combined volume was gradually reduced to less than 10 GW. Just 6.4 GW was awarded.

The situation is not improving this year either

The situation has not improved dramatically this year either. Projects were again in short supply in the first auction of the year, which offered just under 2.5 GW of capacity. According to data from Germany's network regulator, Bundesnetzagentur, 135 projects with a total installed capacity of 1.84 GW were submitted to the auction. The regulator had to exclude six projects, leaving projects with a total capacity of 1.8 GW to take part in the auction.

"The encouraging trend is continuing. Auctions for onshore wind farms continue to consolidate. We are not yet where we want to be in terms of wind power development to achieve our targets. But we are on the right track," said Klaus Müller, president of the German regulator.

Since the auction was nowhere near fully subscribed, the awarded guaranteed prices unsurprisingly remained close to the price cap of 73.5 EUR/MWh. The lowest awarded price was 72.5 EUR/MWh, while the weighted average of all awarded prices was 73.4 EUR/MWh.

As usual, projects in the northern part of the country dominated the latest auction, specifically in the federal states of North Rhine-Westphalia (379 MW), Lower Saxony (319 MW), Mecklenburg-Western Pomerania (274 MW) and Brandenburg (244 MW).