Thomas Schneider
2017 – Zero cents, big impact: How one auction year changed offshore wind financing
When zero-cent bids were submitted for the first time in the 2017 offshore wind auction, it was a bombshell for the industry. What did this mean for investors, banks, and supply chains? Udo Schneider closely followed this phase.
Mr. Schneider, in 2017, the industry caused a stir with the first zero-cent bids. What was your initial reaction back then—and how did this moment change the perception of offshore wind?
"We supported another bidder in the auction and therefore my first thought was: What a bet from EnBW and Orsted on future electricity prices and technologies! My second thought: Damn, someone thinks my electricity bill will rise in the future. Basically, it was good news for the sector: Offshore wind has arrived on the market! It's nice to see that He Dreiht and Borkum Riffgrund 3 can now feed in electricity. Or at least almost. Bet won!"
From today's perspective: What impact does price pressure have on the industry – on developers, supply chains, and investors?
"In addition to technology-dependent production capacity, construction and capital costs are the key value drivers in offshore projects. Until 2022, falling capital costs made offshore wind competitive – as did the innovative performance of the supplier industry, which often delivered larger turbines in small batches at its own risk. With rising demand, manufacturers have recently been able to achieve better prices and margins – a long-overdue step for a sustainable industry. But now, competitive pressure is growing again – especially from China."
How has the financing model for offshore wind changed as a result of the zero-cent bids?
"The offshore wind industry has gone through various financing phases: Previously, It is about using the technology “bankable at stairs“ – today it is about making future To make market prices calculable. Banks charge for cheap loans the security that Electricity can also be sold reliably and profitably on 27 September 2035, for example PPAs play an important role in mitigating risks. However, whether it is Expansion targets sufficient long-term PPAs from creditworthy customers at attractive It is increasingly questionable whether there will be conditions."
What do you think is the most important lesson from this phase – and what is needed for offshore wind to remain economically viable in the long term?
"Capital costs are a key value driver alongside technology – they reflect project risks which are increasingly difficult to calculate. Without risk-appropriate returns, investments hardly possible anymore. Failed tenders, for example in Denmark, demonstrate the consequences. Against this background, the BWO-supported initiative “A New Offshore Wind Deal for Europe” with the demand for CfDs only logical. The industry can manage technology risks manage – but 30 years of market risk is a growing challenge even for major players. Challenge."
What was also important in 2017:
- Offshore wind energy in Europe recorded a record increase of 2017 MW of installed net capacity in 3.148: 560 new offshore wind turbines in 17 wind farms.
- 1.483 MW fully commissioned in Germany: 350 MW Wikinger, 332 MW Nordsee One, 111 MW Nordergründe, 402 MW Veja Mate, 288 MW Sandbank go online
- First tender for offshore wind farms under EEG rules: Ørsted and EnBW secure 1550 MW
- The Offshore Wind Energy Act (WindSeeG) comes into force
- A consortium led by Senvion aims to build a 10+ MW offshore wind farm
- Approved Kaikas project excluded from tenders: Developer wpd files constitutional complaint
- The offshore converter platform DolWin Gamma is disembarked in Rostock-Warnemünde – the last converter platform from Germany to date
