DONG Energy To Build Subsidy-Free German Offshore Wind Farms

Posted by Betsy Lillian on April 20, 2017 No Comments
Categories : Projects & Contracts

In the first of two German auction rounds, the Bundesnetzagentur recently awarded DONG Energy the right to build three offshore wind projects in the German North Sea.

DONG Energy submitted six projects in the bid and won with the following three wind farms, which have a total capacity of 590 MW:

• OWP West (240 MW);
• Borkum Riffgrund West 2 (240 MW); and
• Gode Wind 3 (110 MW).

The three projects are expected to be commissioned in 2024 (subject to a final investment decision by DONG Energy in 2021).

For two of the projects – OWP West and Borkum Riffgrund West 2 – DONG Energy made bids at zero EUR/MWh – i.e. these projects will not receive a subsidy on top of the wholesale electricity price. The Gode Wind 3 project was awarded based on a bid price of EUR 60/MWh.

“We’re pleased with being awarded three projects in the first of two German auction rounds, and we have good opportunities to add further capacity to our winning projects in next year’s German auction,” comments Samuel Leupold, executive vice president and CEO of wind power at DONG Energy. “[These] results contribute to our ambition of driving profitable growth by adding approximately 5 GW of additional capacity by 2025.”

DONG Energy currently has 902 MW of offshore wind in operation in German waters. In total, DONG Energy operates 3.6 GW of offshore wind capacity across Germany, the U.K. and Denmark and has a further 3.8 GW under construction.

Leupold adds, “The zero-subsidy bid is a breakthrough for the cost-competitiveness of offshore wind, and it demonstrates the technology’s massive global growth potential as a cornerstone in the economically viable shift to green energy systems.”

DONG Energy will be responsible for the turbines, array cables and offshore substation, while grid operator TenneT will be responsible for construction, operation and ownership of the onshore substations and export cables.

According to the developer, the cost reductions required for a German project without subsidies are fully feasible, both technically and commercially. Toward a final investment decision in 2021, DONG Energy will monitor key factors that will determine long-term power prices in Germany. These factors include the impact of European Union actions to reinvigorate the European carbon-trading scheme; the phase-out of conventional and nuclear capacity; the future role of coal in Europe; and the build-out of onshore transmission grids.

Photo courtesy of DONG Energy

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