Germany resets the scale for offshore wind bidding

Germany’s multi-GW offshore wind auction results have been announced today after several weeks of gruelling bidding. And the winners are…

• Bp OFW Management (likely associated with Bp) won two sites; and
• Two project companies later announced to be owned by TotalEnergies won the other two sites

These two committed to building 7GW of clean energy with no price support from the end user and the commitment to pay EUR 12.6bn (in numbers: EUR 12,600,000,000) or roughly EUR 1.8 million per MW to support nature protection and German electricity customers.

These prices exceed previous benchmarks set in the UK and the US in the past while blowing away recent lower valuations observed in Ireland and Lithuania. A ringing endorsement of the continuing attractiveness of the offshore wind sector and the potential that big players see in it.

These numbers make German household electricity customers the other big winner as 90% of this number will go to reducing electricity customer bills over the next 20 to 30 years; reducing bills by the equivalent of over 100 million free MWh at current prices (enough to supply nearly 30 million families of four for a year each).

On the other hand, the lease fees would buy you:

• roughly 5GW of additional offshore wind farms that could have been built; or
• the ten most expensive paintings in the world – more than 5 times over; or
• 0.7% of Saudi Aramco, the world’s largest oil company; highlighting that maybe in the world of Big Oil these numbers are not quite as big as they first look.

German offshore wind is well and truly back in business with a bang. For those who were not successful there are several other auctions in Germany and beyond to pursue in the second half of this year and next. They all bring their different features, some placing less weight on the financial strength of the bidder than this German auction did. Watch this space for coverage of some of them after the summer break.