'Citizens' energy' wins auctions for on-shore wind installations

The citizens' energy undertakings have had the most success in the first round of auctions for on-shore wind energy. They accounted for two thirds of all bids submitted and for a staggering 93 per cent of all successful bids. The lowest price achieved was 5.25 cents per kilowatt hour.

Four colleagues in an office.© Holger Vonderlind

Citizens' energy undertakings are exempted from some of the requirements that must normally be met in order for a wind power project to be able to compete for funding. This has had the desired effect and allowed them to be very successful. In the first round of auctions, two thirds of all bids were submitted by this kind of undertaking. Even more impressively, they won 93 per cent of the funding awards. Overall, 65 of the 70 projects that were successful were proposed by citizens' energy undertakings, with other stakeholders accounting for just 5 successful projects.

Altogether, 256 bids for projects with a combined volume of 2,137 megawatts were submitted; the actual volume up for auction was for a capacity of 800 megawatts. This means that the capacity for which proposals were submitted was 2.5 times larger than the capacity being auctioned off. The lowest bid to be accepted was for 5.25 cents per kilowatt hour, the highest for 5.78 ct/kWh. The successful projects are located in nine different German states, all across the country.

Successful transition to market-based pricing

Said Rainer Baake, State Secretary in the Federal Ministry for Economic Affairs and Energy: "The fact that we have seen this high level of competition which has brought prices down this much and that there has been such broad-based public participation shows that the paradigm shift we have initiated away from fixed funding rates stipulated by government to market-based pricing has worked well".

The expansion in the use of renewables in Germany is the result of the hard work and dedication of a large number of individuals, companies and initiatives. Local citizens' energy undertakings, in particular, have achieved a great deal in terms of raising public acceptance for renewables. For this reason, the Federal Ministry for Economic Affairs and Energy had devised a strategy to ensure that this type of initiative can survive in the competitive auctioning process.

Citizens' energy undertakings benefit from two exceptions

Citizens' energy undertakings are given two advantages over other competitors in the process: first of all, they are able to submit bids for a wind farm without the need to obtain a licence beforehand. If they make use of this option, they are given an extra 24 months to complete the project. Second, unlike other competitors, the funding they receive is equal to the highest price that was accepted, in this case 5.78 Ct/kWh – not the price for which the bid was originally submitted. These two exceptions have helped lower the risks incurred by the citizens' energy undertakings and have helped maintain a high level of diversity of actors in the development of renewable energy. Citizens’ energy initiatives are required to offer 10 per cent of their shares to the municipality.

Study shows that wind power is likely to become even cheaper

Over the next few years, on-shore wind power is likely to become even cheaper to produce. A study conducted by the Agora Energiewende think tank has found that the overall cost may well continue to fall compared to the prices that were set in the latest round of auctions. This is likely to be accomplished thanks to the development of more powerful systems and larger rotor blades, with potential earnings dwarfing the additional costs. The analysis also sees further potential for lowering the cost of leases and maintenance work, both which it says are higher than the international average.