Spanish utility Iberdrola plans to exercise its preemptive 'right of legal entry' for a 300MW zone in Germany’s latest offshore wind round, in a move that could make the Baltic Sea part of the auction less competitive.

German grid agency BNetzA launched the round on Friday for 958MW in grid-connection capacity across three areas in the North and Baltic Seas, at a maximum support price of €73 ($88) per megawatt hour.

The auction is not fully competitive, as for two of the three areas, companies hold so-called ‘legal entry rights’ after the auction, meaning they can snap away the zone from whoever would have won the auction otherwise by matching the winning bid.

The rule was introduced as a compensation for companies that had incurred dozens of millions of euros in development costs for an area, but still didn't win with that project in the 2017 or 2018 auctions for pre-developed zones. Iberdrola has such a preemptive right for the O-1.3 zone now entering the auction, which it had pre-developed as Windanker.

“I wish to confirm that Iberdrola plans to make use of its legal entry right for Windanker and that we’ll try our best to win the tender for this project (which was developed by us) in order to increase installed capacity in the German Baltic Sea to over 1.1GW,” an Iberdrola press official told Recharge.

The final decision on whether the company will indeed exercise its legal entry right will depend the outcome of the auction, though, the company added.

Windanker is close to the 350MW Winkinger array Iberdrola is already operating in the German part of the Baltic Sea.

The Spanish utility has earlier said it plans to build a giant wind complex in the area northeast of the island of Rügen that would also include extensions to Wikinger and the nearby Baltic Eagle project – taking advantage of scale and synergies during construction and operation.

Northland Power

The second area with a legal entry right attached to it at this year’s German offshore wind auction is the 433MW N-3.8 zone, or Nordsee Two, the BNetzA said. German utility RWE in 2014 had sold an 85% stake in the project to Canada's Northland Power.

Northland Power had no immediate comment.

If the Canadian company also were to exercise its legal entry right, real competition in this year's German offshore wind tender would be limited to the N-3.7 zone in the North Sea, which according to the grids agency has a capacity for a 225MW wind farm.

Germany's offshore wind sector had mixed feelings about the compensation for developers through the legal entry right solution.

"We called that (the return of development rights) a 'cold expropriation' five years ago. The legal entry right is a small consolation," said Andreas Wagner, managing director of the offshore wind foundation.

"But it depends on how low bid will be."

Iberdrola (and Northland in case it will also make use of its entry right) could end up receiving no support for their developments, if there is a zero subsidy outcome at the offshore auction.

There were zero subsidy outcomes at both German tenders for pre-developed zones of wind at sea. The Netherlands also already had several offshore wind auctions with a zero-subsidy outcome.

After the first 'centralised' auction this year, the BNetzA under the revamped plan will need to tender off roughly the same amount next year and in 2023, to be followed by a 2.9GW auction in 2024, and 4GW in 2025. Successful bidders have five years time until the commissioning of their projects (see fact box below).

Also in coming years, the BNetzA will auction off areas for which companies "potentially" have legal entry rights, but the agency didn't tell Recharge which those areas are and said it will verify that ahead of each auction.

UPDATES to add box with tendering schedule

Wind

First among equals: Iberdrola may use right to claim project whoever wins German offshore wind tender