Germany’s Federal Network Agency announced the results of the offshore wind auction for the non-centrally pre-developed area N-9.4, located in the North Sea approximately 150 km northwest of the island of Heligoland. The concession, covering around 141 square kilometers, was awarded to North Sea OFW One GmbH, a company partly owned by TotalEnergies, with an allocated capacity of 1,000 MW.

The auction was conducted through a multi-stage competitive bidding process that initially involved bids at zero cents per kWh, followed by a dynamic round where the bidder with the highest willingness to pay was selected. North Sea OFW One GmbH submitted the winning bid of €180,000 per MW, totaling €180 million to be paid to the German government in 2026.

The project is expected to generate enough electricity to power over one million households and comes with a concession period of 25 years, extendable up to 35 years. The N-9.4 site’s proximity to the N-9.1 and N-9.2 projects, jointly owned by RWE and TotalEnergies, is anticipated to create synergies in construction and operations, optimizing costs.

Credit: TotalEnergies

In addition to the initial payment, Offshore Wind One GmbH will pay an annual contribution of €8.1 million for 20 years to the electricity transmission system operator responsible for connecting the project. Furthermore, €18 million will be allocated towards marine conservation and promoting environmentally sustainable fishing practices.

Concerns raised by WindEurope on Germany’s auction model

Despite the successful bid, the auction format has attracted criticism from WindEurope, the leading industry association for wind energy in Europe. WindEurope CEO Giles Dickson highlighted that Germany’s offshore wind auction design requires revision, particularly pointing out the use of “negative bidding.”

“Negative bidding creates additional costs which have to be passed on to consumers and the wind energy supply chain,” Dickson said. “It may be a short-term gain for finance ministries, but it’s a long-term cost for society.”

Negative bidding, where bidders waive subsidies and sometimes pay for the right to develop projects, is believed to distort market dynamics and increase overall costs. This format also appears to have deterred competition — only two bidders participated in this round, signaling a shrinking pool of offshore wind developers willing to engage under these terms.

WindEurope advocates for the adoption of two-sided Contracts for Difference (CfDs) across Europe, including Germany. CfDs provide revenue stabilization by guaranteeing a fixed price for electricity, which lowers financing costs and offers developers greater visibility into future revenues. This model supports sustainable growth of offshore wind capacity with reduced financial risk.

Furthermore, the European Union supports the transition to CfDs alongside alternative power purchase agreements (PPAs), allowing developers to sell power directly to industrial customers under negotiated contracts, adding flexibility and market integration.

Germany’s next offshore wind auction, scheduled for August 2025, will include two centrally pre-developed sites with a combined capacity of 2.5 GW. This auction will blend negative bidding with non-price criteria such as technical and environmental quality, in an effort to balance cost competitiveness with project sustainability.