September 8, 2017
Germany

Germany may miss 2019/20 onshore wind goals: Commerzbank

By Bernd Radowitz | 08 September 2017 | www.rechargenews.com

Following several bumper years of above-average onshore additions, Germany could miss government-set installation targets in 2019 and 2020 as Europe’s biggest wind market suffers a fallout of projects following a move to tenders, finance giant Commerzbank says.

While the average annual onshore expansion from 2013 to 2017 is likely to come in at around 4.2GW, additions will move closer to the government’s 2.8GW target next year, the bank says in a market study ahead of the Husum Wind 2017 industry fair next week.

In 2019 and 2020, Germany will undershoot government set targets of 2.8GW and 2.9GW respectively, the bank estimates, without detailing exactly by how much.

“Due to awards of winning bids for citizens’ energy companies – which have no permit yet and a very long construction deadline – we expect a relatively low completion rate,” Commerzbank energy expert Fabian Schlüter told Recharge.

“With a (winning) bid of €42.8 (per megawatt hour), projects can hardly be built in Germany, given the current cost structure.”

The average price at Germany’s 1GW second onshore wind tender in August fell to €42.8/MWh ($51.5/MWh), down from €57.1/MWh at a first onshore tender for 807MW in May.

Most of the volume in both tenders was won by citizens’ cooperatives that need fewer permits to be able to participate in the auction and get more time to build their projects.

Commerzbank’s estimate for a fall in wind additions below the government target confirms industry fears that the design of the auctions, with its preferential treatment for citizens’ power, could lead to a sharp downturn in the German wind power market.

A great part of winning projects from this year’s auctions will only be built if cost structures for wind projects really change within the 55 months citizens’ projects have for construction to be completed, Schlüter reckons. Other developers, by contrast, under the German tendering rules have only 30 months to complete their projects after they won a bid.

To get costs down further, technology needs to advance more, with larger and more efficient turbines on the market, he adds.

In a first reaction to criticism from the wind sector, the government in Berlin has decided that citizen group bidders during the first two onshore wind auctions next year also have to provide a permit under Germany’s emissions control act, just like any other bidder. But that rule doesn’t kick-in for a third, 1GW, auction later this year, nor is it valid for further onshore auctions next year or beyond.

Projects from successful tendering not being built is a problem across the globe, Commerzbank explains, with less than half of winning bids in Brazil, France or Italy actually being built, and a completion rate of only around 75% in California or South Africa.

Part of that is due to strategic underbidding by developers that can lead to a so-called “winners curse”, Commerzbank says.

Commerzbank has a €6.4bn portfolio in renewable energy financing, €4.9bn of which are in project finance.

URL to article:  https://www.wind-watch.org/news/2017/09/08/germany-may-miss-201920-onshore-wind-goals-commerzbank/