On 12 July 2023, Germany’s Federal Network Agency (Bundesnetzagentur, “BNetzA”) announced the 2023 auction results for sites that had not undergone central preliminary investigation, and on 10 August 2023 the auction results for sites that had undergone central preliminary investigation. The auction and award process for the non-centrally pre-investigated sites put to auction generated a total of EUR 12.6 billion. The auctions were based on the 2023 site development plan (“SDP”) published by the Federal Maritime and Hydrographic Agency (Bundesamt für Seeschifffahrt und Hydrographie). The sites and auction volumes stipulated in the SDP are the vehicle for achieving the desired expansion in offshore wind energy capacity from the current 8 GW of installed capacity to 30 GW by 2030.
Overview of the auction and award procedure
The sites and auction volumes specified in the SDP are put up for auction by the BNetzA in the indicated calendar years. The sites include sites that have undergone central preliminary investigation (“pre-investigated”) and sites that have not (“non-investigated”). Successful bidders for non-investigated sites must carry out an own preliminary investigation into the marine environment, seabed and wind and oceanographic conditions before wind farm construction. Bids for non-investigated sites must be submitted by 1 June of the respective calendar year and bids for pre-investigated sites by 1 August.
The successful bidder for each non-centrally pre-investigated site is the one with the lowest funding requirement for a wind farm on the site. If a number of bidders submit zero-cent bids per kilowatt hour and waive funding (in particular the market premium), a “dynamic bidding procedure” is conducted. In this procedure, the successful bidder is the one willing to pay the highest amount (“pay to play”). Of the proceeds from the dynamic bidding procedure, 90% goes towards reducing electricity costs, while marine conservation and sustainable fishing each receive 5%.
The successful bidder for each centrally pre-investigated site is the one whose bid receives the highest number of points in an assessment procedure. The bid amount is decisive, as this is where the most points are awarded. Four qualitative criteria are also assessed.
2023 auction and award procedure
On 31 January 2023, the BNetzA presented four non-investigated sites in the North and Baltic Seas with a combined capacity of 7,000 MW for auction. Bidders had until 1 June 2023 to bid for the sites. As each site attracted a number of bidders submitting zero-cent bids and waiving funding, the first-ever dynamic bidding procedure was conducted to establish what the bidders were willing to pay. The successful bidders were determined online in a series of bidding rounds at increasing bid levels:
Site N-11.1, with an auction volume of 2,000 MW, was awarded at a bid value of EUR 1.83 million/MW after 64 bidding rounds. Site N-12.1, also with an auction volume of 2,000 MW, was awarded at a bid value of EUR 1,875 million/MW after 65 bidding rounds. The successful bid for site N-12.2 (auction volume 2,000 MW) was EUR 1.56 million/MW after 55 bidding rounds and for site O-2.2 (auction volume 1,000 MW) EUR 2.07 million/MW after 72 bidding rounds. The total amount achieved was EUR 12.6 billion.
On 27 February 2023, the BNetzA presented four pre-investigated sites in the North Sea with a combined capacity of 1,800 MW for auction. Bidders had until 1 August 2023 to bid for these sites.
The successful bidders now have a right to a planning approval procedure for constructing and operating offshore wind installations on their site as well as to grid connection and grid connection capacity.
Outlook
The EUR 12.6 billion achieved in the 2023 auction and award process for non-investigated sites clearly illustrates the attractiveness of investments in offshore wind energy. The 2023 SDP identifies ten further sites with a total capacity of 14,000 MW for continued expansion of offshore wind energy during the years 2024 to 2027.
In 2024, three pre-investigated sites in the North Sea with a total auction volume of 5,500 MW will be put up for auction with bids due on 1 August 2024. These are sites N-9.1 (due to become operational in Q3 2029) and N.9.2 (due to be come operational in Q3 2028), each with a planned installed capacity of 2,000 MW, and site N-9.3 (due to become operational in Q4 2029), with a planned installed capacity of 1,500 MW. In addition, two non-investigated sites in the North Sea with a combined capacity of 2,500 MW will be put up for auction with bids due on 1 June 2024. These are site N-11.2, with a planned installed capacity of 1,500 MW, and site N-12.3, with a planned installed capacity of 1,000 MW (each due to become operational in Q3 2031).
Two pre-investigated sites in the North Sea will be put up for auction in 2025, with bids due on 1 August 2025. These are sites N-10.2, with a planned installed capacity of 500 MW, and N-10.1, with a planned installed capacity of 2,000 MW. The wind farms are due to become operational in Q3 2030.
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