Germany extends FIT 'compression'

German environment minister Peter Altmaier today announced that the country’s incoming government will prolong the current “compression model” for offshore wind feed-in tariffs (FITs) for two more years, meeting the demands of the sector.

Under the compression model, offshore developers and operators can opt to receive a higher FIT of €0.19 ($0.26) per kilowatt hour during the first eight years of operation, helping companies to meet elevated upfront investment costs.

Following the extension, projects that are grid-connected by the end of 2019 will still be entitled to opt for the compression model. Previously, the deadline for the model was December 31, 2017.

The FIT then goes down to a lower-than-usual €0.035 per kWh for another 12 years.

“This is very positive for the industry,” Ronny Mayer, managing director of the wind energy agency WAB, which represents the offshore sector in the key northwestern region, told Recharge in an immediate response to the news.

Offshore groups and companies at the EWEA Offshore conference that ended in Frankfurt earlier today had urged the negotiators in current coalition talks in Berlin to extend the compression model or face thousands of job losses, as without it no new final investment decisions would have taken place.

"The decision is a good sign to investors as it brings clarity and security," Urs Wahl, policy officer at the national Offshore Wind industry Alliance OWIA, told Recharge.

“It has created an essential prerequisite for triggering investments for a second wave of offshore expansion. With the decision the process to really be able to achieve cost reduction potentials in the offshore sector is secured.”

Altmaier said an agreement on the extension of the compression model was reached after a meeting with investors in offshore wind and Germany’s five coastal states.

The expansion puts the build-up of offshore on a reliable path, he said.

“We got the impression that this wasn’t only welcomed by industry representatives, but that through (the extension) a knot can be cut and that we will trigger the next wave of investments,” Altmaier said at a press conference in Berlin.

The extension of the FIT model will actually help create more jobs in the industry, and give investors and wind energy companies planning security until 2019, stressed Stephan Weil, the state premier of Lower Saxony, a northern German coastal state hosting much of the country’s offshore wind industry.

Weil from the SPD, who announced the extension together with Altmaier, lamented that many jobs in the offshore industry have already been lost due to past planning insecurity. With the extension of the compression model, the offshore wind industry will be able to reduce its costs in the mid-term, he added.

Weil added that the expansion of the compression model likely will trigger some €12bn in investments. Those are needed to put a further 3GW of offshore wind capacity on the North and Baltic Seas off Germany and reach the government’s new 6.5GW offshore wind target for 2020.

A first wave of some 3.5GW in offshore wind developments is currently already built, being constructed or in advanced stages of planning.

Offshore wind power will stabilise the Energiewende in Germany and prompt other countries to follow suit, Weil claimed.

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