Why 'Germany speed' offshore wind could have a $300m sting in the tail
Measures to cut red tape for projects sound just what the industry needs – but it fears compensation payments could add to a growing roster of extra costs, writes Bernd Radowitz
‘Germany speed’ – that’s the term coined by Chancellor Olaf Scholz for the race to build the energy infrastructure needed to free Europe’s largest economy from reliance on Russian gas, an urgency that has already seen the nation build its first three floating liquefied natural gas (LNG) terminals with more planned.
Vice chancellor and climate minister Robert Habeck now wants to bring ‘Germany speed’ to offshore wind – cutting through the red tape that traditionally delays major infrastructure projects for years – under immense pressure to reach the country’s target to build 30GW of wind at sea by 2030 and 70GW by 2045, up from little more 8GW now.
Habeck is pushing to rush legislative changes to Germany’s spatial planning and wind at sea acts through parliament in a bid to accelerate permitting procedures by scrapping individual environmental impact assessments (EIAs) for new offshore wind farms – mirroring a similar measure for the construction of the new LNG terminals. A draft of the measures has already been approved by the cabinet.
A less detailed ‘strategical’ environmental assessment would instead be carried out by the government itself to see whether wider zones of sea are suitable for offshore wind clusters. A similar approach is expected for offshore grid connections.
Long-term monitoring is foreseen for species that may potentially be threatened by large-scale wind development.
Devil in the detail
The wind sector in principle is enthusiastic about simplifications that could speed up offshore wind developments by several months. But the devil could be in the detail of the planned legislative changes.
An even bigger concern among offshore wind operators is the government’s plan to replace the need for an EIA with a compensation payment for species protection of between €500 ($530) and €2.500 per megawatt each year.
The BWO has calculated that this could cost all offshore wind operators a total up to €50m over 20 years per gigawatt of installed capacity. For the entire 6GW offered in the North Sea – the scrapping of the EIA is not foreseen for the Baltic Sea – under Germany’s current 7GW special offshore wind tender, the wind industry would face a bill of €300m ($318m) over that period.
That may not on the face of it sound excessive, especially as it is unlikely that one operator will win the entire 6GW of North Sea acreage in the auction. But the BWO stressed that this comes on top of other new costs, such as likely payments for offshore zones through a just-introduced potential for negative bidding in the German auction – which is comparably to payments in US seabed lease auctions.
The wind sector has already complained on various occasions about Germany’s introduction of an uncapped negative bidding component in the latest auction, arguing the measure could eventually drive up power prices for consumers at a time Europe needs to wean itself off Russian energy and already is facing a gas supply crunch.
“The combination of this [compensation] payment with the share of the negative bid component of the current WindSeeG [Wind at Sea Act] earmarked for nature conservation expenditure and the existing Federal Nature Conservation Act could lead to a disproportionately high burden,” BWO managing director Stefan Thimm said.
The BWO added that an EIA for an average offshore wind farms costs around €5m only, meaning developers would be worse off if they had to pay the €50m per GW of installed capacity (over 20 years) instead of the normal EIA costs.
“In principle, we think the simplification [of permitting] is good, but the exact type of simplification still raises many questions. There are many technical details involved. What exactly do you need to get a permit?” the BWO asked.
The Bundestag, the lower house of parliament, is slated to start discussions on the amendments to the spatial planning and wind at sea legislation Wednesday, with the industry hoping that 'Germany speed' won't turn into a fast-track to extra cost.
10GW of offshore interconnectors
The economics and climate ministry jointly with transmission system operators 50Hertz and TenneT this week also presented a plan to interconnect 10GW of wind farms at sea, and also link them to neighbouring Denmark and the Netherlands.
The so-called 'hybrid interconnectors' are meant to boost international power trading and thus increase Europe's security of supply.
"With additional grid connections, more cost-effective electricity from renewable energies can be imported to Germany. At the same time, we have to curtail less electricity," Habeck said on Monday.
"The plans presented today show how we will transform the energy system in close cooperation with our European neighbors. Wind energy at sea will play a crucial role in the climate-neutral energy system.”
The ministry in a study has found that a cross-border North Sea grid would lower greenhouse gas emissions, increase security of supply and lower costs considerable.