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Yahoo
3 days ago
- Business
- Yahoo
German wind auction flop sparks fears for Miliband's UK sale
A German offshore wind auction has received no bids after developers baulked at the low subsidies, just as Ed Miliband prepares to offer lucrative taxpayer support in Britain to avoid a similar flop. The Federal Network Agency offered up plots in two areas of the North Sea, which authorities were hoping could host wind farms that would have opened in the early 2030s. But the competition was snubbed by developers, with an industry association claiming the result was a 'clear message' that Germany's government needed to stump up more cash. Stefan Thimm, of the German Offshore Wind Energy Association, said: 'The German offshore wind market is currently not attractive to investors. The federal government is thus missing the opportunity for significant value creation and employment in Germany and Europe.' The failed auction came as Britain quietly launched its own similar auction on Thursday, with Mr Miliband, the Energy Secretary, expected to offer bumper subsidies to attract enough wind farm capacity to meet his clean power targets. The German results underscored the difficulties being experienced by Europe's offshore wind industry, which has been buffeted by rising costs and interest rates in recent years. That has squeezed the profitability of projects, making them more reliant on top-ups from government subsidies. However, the precise level of state support has proved a sticking point. Britain's own wind auction received no bids in 2023 after ministers initially refused to raise the subsidies on offer. They later backed down, with Mr Miliband overseeing a record £3bn of contract for difference (CfD) awards last year. He has since reformed CfDs, which guarantee wind farm revenues, so that they last 20 years instead of 15. The costs are added to the bills of consumers, who will end up paying them until the 2040s. This year's auction round in the UK, known as AR7 to the industry, is viewed as critical because it is the last time the Government can realistically attract new capacity in time for the 2030 clean power targets, given the time it takes to construct a wind farm. Analysts at Bernstein said the auction held 'existential' importance for Mr Miliband's flagship policy and estimated that winning bids could pay at least £85 ($114) a megawatt-hour, up from £82 last year. That is higher than wholesale power prices last year, which averaged £74 per megawatt-hour, and would mark the second time in a year that the price for offshore wind has risen. Andy Mayer, an energy expert at the Institute of Economic Affairs, said he expected the British auction to 'go the other way' to its German equivalent. He said: 'The straightforward reality for the wind market at the moment is that costs are rising – they are as affected by rising inflation as any other industry. 'So the myth that the price of renewables would always get cheaper, which existed between 2015 and 2022, has been blown apart. 'But in Britain's auction, I expect developers will fill their boots, because the politicians have decided that we must roll out a certain amount of wind power per year at all costs.' Under Mr Miliband's clean power action plan, the Government is targeting 43 to 50 gigawatts of offshore wind capacity compared to about 15 gigawatts today. However, the plans are opposed by Reform UK – led by Nigel Farage – which has threatened to scrap any contracts awarded to wind farm developers and slash net zero-related expenditure across Whitehall. Richard Tice, the party's energy spokesman, wrote to energy companies last month to warn them of the Reform plan. He said: 'You should treat any long-term revenue streams as politically and commercially unsafe.' Mr Mayer said reneging on the contracts would be hugely risky and might cause a collapse of business confidence in Britain. However, he suggested the party may avoid the need to do this by simply introducing a windfall tax to claw back the revenues, something Mr Tice has also threatened in the past. Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more.
Telegraph
3 days ago
- Business
- Telegraph
German wind auction flop sparks fears for Miliband's UK sale
A German offshore wind auction has received no bids after developers baulked at the low subsidies, just as Ed Miliband prepares to offer lucrative taxpayer support in Britain to avoid a similar flop. The Federal Network Agency offered up plots in two areas of the North Sea, which authorities were hoping could host wind farms that would have opened in the early 2030s. But the competition was snubbed by developers, with an industry association claiming the result was a 'clear message' that Germany's government needed to stump up more cash. Stefan Thimm, of the German Offshore Wind Energy Association, said: 'The German offshore wind market is currently not attractive to investors. The federal government is thus missing the opportunity for significant value creation and employment in Germany and Europe.' The failed auction came as Britain quietly launched its own similar auction on Thursday, with Mr Miliband, the Energy Secretary, expected to offer bumper subsidies to attract enough wind farm capacity to meet his clean power targets. The German results underscored the difficulties being experienced by Europe's offshore wind industry, which has been buffeted by rising costs and interest rates in recent years. That has squeezed the profitability of projects, making them more reliant on top-ups from government subsidies. However, the precise level of state support has proved a sticking point. Britain's own wind auction received no bids in 2023 after ministers initially refused to raise the subsidies on offer. They later backed down, with Mr Miliband overseeing a record £3bn of contract for difference (CfD) awards last year. He has since reformed CfDs, which guarantee wind farm revenues, so that they last 20 years instead of 15. The costs are added to the bills of consumers, who will end up paying them until the 2040s. This year's auction round in the UK, known as AR7 to the industry, is viewed as critical because it is the last time the Government can realistically attract new capacity in time for the 2030 clean power targets, given the time it takes to construct a wind farm. Analysts at Bernstein said the auction held 'existential' importance for Mr Miliband's flagship policy and estimated that winning bids could pay at least £85 ($114) a megawatt-hour, up from £82 last year. That is higher than wholesale power prices last year, which averaged £74 per megawatt-hour, and would mark the second time in a year that the price for offshore wind has risen. Andy Mayer, an energy expert at the Institute of Economic Affairs, said he expected the British auction to 'go the other way' to its German equivalent. He said: 'The straightforward reality for the wind market at the moment is that costs are rising – they are as affected by rising inflation as any other industry. 'So the myth that the price of renewables would always get cheaper, which existed between 2015 and 2022, has been blown apart. 'But in Britain's auction, I expect developers will fill their boots, because the politicians have decided that we must roll out a certain amount of wind power per year at all costs.' Under Mr Miliband's clean power action plan, the Government is targeting 43 to 50 gigawatts of offshore wind capacity compared to about 15 gigawatts today. However, the plans are opposed by Reform UK – led by Nigel Farage – which has threatened to scrap any contracts awarded to wind farm developers and slash net zero-related expenditure across Whitehall. Richard Tice, the party's energy spokesman, wrote to energy companies last month to warn them of the Reform plan. He said: 'You should treat any long-term revenue streams as politically and commercially unsafe.' Mr Mayer said reneging on the contracts would be hugely risky and might cause a collapse of business confidence in Britain. However, he suggested the party may avoid the need to do this by simply introducing a windfall tax to claw back the revenues, something Mr Tice has also threatened in the past.
Reuters
4 days ago
- Business
- Reuters
German minister flags risks to tenders as offshore auctions draw no bids
BERLIN, Aug 6 (Reuters) - Germany's Economy Minister Katharina Reiche warned on Wednesday that flawed site selection and shifting market dynamics were undermining offshore wind tenders, as the country's latest offshore auctions received no bids. Two August tenders for offshore wind energy plants, with volumes of 2,000 MW and 500 MW, and planned commissioning dates in 2031 and 2030, drew no bids for the first time ever on Wednesday, utility association BDEW said, citing the Federal Network Agency. Reiche said the tendered area was riskier due to its geographical and geological conditions, located in deep waters where there could be erosion of foundations and highly challenging structural conditions. "The first question is: Were the designated areas appropriate, or were potential risks for developers ... underestimated? We need to look at this critically," Reiche told a news conference in Berlin. She said changing market conditions with customers no longer willing to uphold Power Purchase Agreements during periods of negative electricity prices and wanting to secure their electricity needs directly from the market instead, was another factor behind developers' reluctance. The Federal Network Agency should review its tender design and consider UK-style reforms to safeguard Germany's offshore wind potential, she added. Germany's network regulator was not immediately available to comment on the results. BDEW cited rising project and capital costs due to geopolitical tensions and supply chain bottlenecks, as well as increasingly difficult-to-predict price and volume risks in the electricity market as additional reasons for the results. They followed a sluggish start to 2025 for the sector, during which Germany failed to connect a single new turbine to the grid, and industry groups pushed for the government to introduce improved auction measures to ensure more turbine additions. As of June 30, 2025 the country had 9.2 gigawatts (GW) of installed offshore capacity, unchanged from December 31, 2024, but 1.9 GW of new turbines are under construction, according to consultancy Deutsche WindGuard, commissioned by the lobbies to gather data.
Bloomberg
4 days ago
- Business
- Bloomberg
Germany Gets No Bidders in Zero-Subsidy Offshore Wind Auction
An offshore wind auction in Germany ended without a single bid, showing that zero-subsidy contracts are not in demand with investors. The Federal Network Agency didn't receive any bids for two areas in the North Sea, the German offshore-wind group BWO said in a statement Wednesday.
DW
16-07-2025
- Business
- DW
What's holding up Germany's power grid renewal? – DW – 07/16/2025
A key factor in Germany's energy transition is the transfer of electricity from the wind-rich north to the industrial south of the country. But a lack of power transmission lines is proving a massive bottleneck. Germany's so-called new high-voltage electricity highways are growing, but experts say their development is failing to keep up with the country's rapid growth in renewable energy. As the wind-rich north of Germany produces ever-increasing volumes of renewable energy in onshore and offshore wind parks, the country's southern regions, where most industrial companies are situated, are craving for electricity, still heavily relying on gas or coal-fired power plants and a bit of solar energy. Almost two decades ago, four transmission system operators (TSOs) were tasked by the German government with building new power lines from north to south. Being responsible for Germany's high-voltage grid, TSOs maintain, operate, plan and expand grid infrastructure. For example, 50Hertz Transmission — owned by Belgian company Elia Group (80%) and German state-owned KfW banking group (20%) — controls the grid in eastern Germany and parts of it in the north. German TSO Amprion is responsible for an 11,000 kilometer (6,800 mile) grid that spans from northern Germany to the Alps in the south. Then, there is TransnetBW in southwestern Germany, and Dutch state-owned TenneT — Europe's biggest TSO. Germany's regulator, the Federal Network Agency, has defined five steps these companies must follow before construction can begin. It starts with the development of a "scenario framework" in which the TSOs outline the likely evolution of energy supply and demand. Next, they must prepare a "grid development plan" and submit an "environmental report." In the third step, a "federal requirement plan" is created, followed by a "spatial planning procedure" in the fourth. The final step is the official "planning approval process." Even after that, construction doesn't immediately begin. The Federal Network Agency — or a relevant regional authority — must still carry out a final "environmental impact assessment." Germany's Power Grid Expansion Act, known as EnLAG, came into force in 2009, and is intended to accelerate the expansion of the power grid to support the transition to renewable energy sources. According to the Federal Network Agency, the regulation calls for around 128 construction projects totaling 16,832 kilometers of power lines by the end of 2024. However, a total of only 34 projects have been "fully completed" until now, the agency said in a statement to DW. What's even more astonishing is that the German regulator expects construction to continue for another eight to 20 years — unless new projects are added. In order to speed up the expansion, the agency's president, Klaus Müller, told German business daily in May that the system "by which grid fees are collected" would need to be reformed. The call came as the charges for using the electricity grid and paid, so far, solely by consumers have been steadily rising in recent years, now making up about a quarter of electricity bills, varying by regions. Müller suggested that grid fees in the future should also be paid by power plant operators and renewable energy providers. Although public resistance to grid expansion has been relatively low-key and limited to local pressure groups so far, the government fears that further rising electricity bills may erode support, leading to more protests and delays in the courts. Setting a firm timeline for when the expansion of Germany's high-voltage grid will be complete isn't realistic. TenneT spokesperson Maria Köhler thinks grid expansion is "not a task that will be completed at a specific point in time." She told DW that it was "an ongoing process" toward a climate-neutral network, with a "target year of 2037 and an extended outlook through 2045." To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video Some grid operators, however, are planning to move faster. 50Hertz Transmission, for example, has more ambitious goals, says company spokesperson Karin Dietl. "In our grid area, we want to fully integrate 100% renewable energy into the grid and system by 2032," she said in an emailed statement to DW. Dietl also pointed to the impediments that would hinder a more rapid expansion pace, such as "a shortage of skilled labor, supply bottlenecks, and lengthy approval processes." TenneT cites similar issues, saying that in this "technically and organizationally complex undertaking," many factors come into play — ranging from "regulatory approvals and coordination with authorities over land access to materials supply, transportation logistics, and workforce capacity." TransnetBW emphasizes one issue in particular. "The biggest obstacles in the past have been long and burdensome approval procedures," spokesperson Claudia Halici told DW, citing the so-called SuedLink power line project as an example, for which "planning and approval took about seven years." Marta Mituta, spokeswoman for the Federal Network Agency, agrees, adding "last-minute changes to temporary infrastructure, species protection measures, or updated results from alternative route assessments" to the stumbling blocks. Most of Germany's green electricity — particularly wind power — is produced in the wind-rich north of the country. In addition, renewable electricity from Denmark and Norway arrives here via subsea power lines and needs to flow further down south to Germany's big industrial consumers. Although Germany managed to largely cut its dependence on Russian gas and oil in a surprisingly short time, achieving energy autonomy remains a critical government goal along the way to become carbon-neutral by 2045. Apart from that, technical issues have increasingly moved to the focus of public debates on the ground, for example, the question of whether or not power lines can run above ground or must be buried underground. Overhead power lines are vehemently opposed by local communities in their vicinity. In addition, they are exposed to storms, snow, and military risks. By contrast, underground cables, don't mar the landscape and are more protected from attacks — but they're far more expensive. Grid operators have a clear preference, though. "TransnetBW has long advocated ending the blanket preference for underground cables in new high-voltage direct-current projects," Claudia Halici, told DW, adding the company expected "savings of €20 to €23 billion [$23.2 to $26.7 billion]" alone for its three transmission line projects currently under construction — about a 50% reduction in total costs. Katrin Dietl from 50Hertz also anticipates €20 billion in savings. "That's why 50Hertz is pushing for a shift to overhead lines in new projects," she said, however, cautioning against "changing course midstream," as this would cause "significant delays" to already approved projects.
