German Auction Sees Wind Energy Costs Drop Another 10 Per Cent

World | Wind Energy

Photo-illustration: Pixabay

Germany’s green business community may have endured a volatile few weeks, after disagreements over the future of coal power derailed Angela Merkel’s attempts to form a coalition government. But there was some good news for the clean energy sector this week, as the latest auction results confirm wind energy costs are continuing to fall sharply.

Grid regulator Bundesnetzagentur announced it had awarded just over 1GW of contracts in an auction that was significantly oversubscribed and resulted in a 10 per cent fall on the prices established by the most recent previous auction.

“Once again, there has been a significant decrease in the prices awarded, down a further 10 per cent on the last auction. The average award price is around 3.8 ct/kWh and thus clearly below 4 ct/kWh,” said Bundesnetzagentur president Jochen Homann in a statement. “The results confirm observations from the previous auctions: almost all of the successful bids came from citizens’ energy companies. These bidders now have four and a half years to implement their projects and in our estimation based their bids on anticipated positive developments in plant technology and falling prices.”

The auction attracted 210 bids totalling over 2.5GW of capacity. BNetzA credited the competitive pressure with driving down prices with the lowest bid reaching just 2.2ct/kWh.

Community projects can bid for contracts before securing planning approval, but BNetzA said the next two onshore wind auctions next year would require bidders to obtain approval before submitting a bid.

Writing on Twitter, Greenpeace’s Doug Parr noted that if similar prices could be achieved in the UK onshore wind projects could significantly undercut wholesale power prices of around £40/MWh.

Supporters of onshore wind have long argued that it provides the cheapest form of new capacity, but development in the UK has been widely blocked in recent years by planning constraints and the government’s refusal to allow projects to compete for price support contracts.