In an effort to rekindle interest among bidders who had previously shied away from auctions due to rapidly increasing prices, Germany’s federal grid agency (BNetzA) has increased the maximum pricing for onshore wind and solar rooftop bids that will be held the following year.
Following previous auctions for both technologies that had been severely undersubscribed, the agency set a new bidding price ceiling of €73.50 ($78.27) per MWh for onshore wind and €112.50 per MWh for rooftop solar systems for tenders in 2023.
Apparently, onshore wind had a €58.88/MWh price cap in the most recent auction, and rooftop solar had a €88.40/MWh price cap. With the newly established maximum values, installations that take part in tenders in the upcoming year can earn a sizable profit. Klaus Müller, president of BNetzA, expressed his optimism that the proportion of bids, which had drastically decreased, would rise once more and that competition could resume.
In order to ensure solid conditions for reaching expansion targets, he continued, the agency is also getting ready to increase the price cap for ground-based solar arrays.
Earlier this month, the German lawmakers expanded the BNetzA’s authority to raise price ceilings by 25% rather than the 10% that had previously been allowed.
Demand for the most recent onshore wind and solar tendering rounds in Germany was disappointingly low, as many investors decided not to submit bids because the price ceilings were too high in light of the recent extreme inflation and rising interest rates that drive up financing costs.
Despite having building licences, only 3.2 GW of the 4.6 GW of onshore wind capacity offered in 2022 was actually awarded, according to the German wind energy association, BWE, which also noted that a record 12.8 GW is scheduled to be auctioned off in 2023.
According to BWE president Hermann Albers, increasing the price cap to €73.50 per MWh already for the first wind contract with a bid deadline of February 1, 2023, establishes the groundwork for widespread participation.
The majority of projects would now be in a stronger starting position, Albers said that even if there will be those for which the maximum value does not yet offer a solid basis in view of large increased costs and further interest rate hikes.
The plainly undersubscribed tenders from the previous year have led the Federal Network Agency to the correct conclusions.