The price for solar power came in well below that of onshore wind once more in Germany’s first round of tenders this year, amid an ongoing permitting malaise in Europe’s biggest wind market.
The average price for PV reached €48.00 per megawatt hour of successful bids as 178MW were tendered off, remaining close to the very low average of €46.90/MWh in a similar round in late 2018.
The solar auction was heavily oversubscribed, with bids totaling 465MW.
In wind power, by contrast, the first auction in 2019 was again undersubscribed as in previous tendering rounds last year.
Only 476MW in bids got a nod from Germany’s federal grid agency (BNetzA), although 700MW had been on offer.
That pushed the average price for onshore wind in this round to €61.10/MWh, close to the €62.00/MWh price ceiling.
“We observe the repeated clear undersubscription of 30% with worry,” BNetzA president Jochen Homann said.
“Together with the sector and the relevant agencies, we need to work on solutions regarding the permitting situation.”
Prices had reached similar levels at Germany’s past two onshore wind auctions in October and August 2018, with €62.60 and €61.60/MWh respectively.
Wind groups are concerned that policies and restrictions limiting the amount of areas available for wind power (such as distance rules, complicated regional planning procedures or air traffic-control constraints) have led to fewer bids and less competition at auctions.
"The expansion of wind energy on land continues in a permitting lull. If Germany wants to maintain its role in global competition and has a real interest to reach its climate targets, something fundamental must change," said Matthias Zelinger, managing director of VDMA Power Systems, a group representing wind OEMs.
Next to more efforts to expand Germany's power grid to make more room for renewables, VDMA Power Systems also demands an action plan for wind energy to tackle its current problems.
Third under-subscribed auction
Also on a European level, the German auction triggered concern.
“This is now the third German onshore wind auction in a row that’s been under-subscribed. It’s clear the permitting process is not fit for purpose," said WindEurope chief executive Giles Dickson.
"The Bundesländer (German states) are reluctant to identify new locations for wind farms. And even if wind farms do get a permit, many then get caught up in legal disputes, which is pushing up costs."
The permitting process for onshore wind currently can take more than two years compared to ten months just two two years ago, WindEurope points out, adding that at least 750MW of wind farm projects are currently stuck in legal proceedings.
Berlin needs to take urgent action to make permitting easier, and states need to identify appropriate new zones for onshore wind, Dickson warned.
"If they don’t, auctions will continue to be under-subscribed, and prices will remain higher than they should be. And this will jeopardise Germany’s target of 65% renewables in electricity by 2030,"
A slower wind expansion following the permitting-related reduction in successful bids could prolong an already ongoing collapse of the German wind market. It has already been hit by administrative barriers and past auction design failures, leading to a steep fall in net additions last year to only 2.15GW, less than half of the 4.87GW registered in 2017.
In solar, bidders were most successful in the southern state of Bavaria, where projects in certain agricultural areas were allowed again.
“The high success rate for bids on agricultural areas in Bavaria shows the uneven competitiveness of solar areas,” Homann said.
Twenty-one of the 24 successful bids in the auction came from rural Bavaria.
UPDATES with comment from WindEurope
