The German Offshore Wind Energy Foundation (Stiftung OFFSHORE-WINDENERGIE) has issued a strong appeal to the incoming federal government to revise Germany’s current offshore wind auction system. A newly published study, commissioned by the foundation and conducted by energy consultancy enervis energy advisors, outlines serious economic and energy policy risks stemming from the existing bidding model and quantifies its potential negative impact for the first time.

Under the current scheme, seabed rights are awarded to the highest bidders—a design that has resulted in record-breaking revenues, including €13.4 billion in 2023 alone. While the Federal Ministry for Economic Affairs and Energy has hailed these returns as a success and evidence of market attractiveness, the study warns that this approach may drive up electricity prices, undermine competition, and jeopardise the realisation of key offshore projects.

Key reforms proposed

Karina Würtz, Managing Director of the Foundation, stated: “The findings must serve as a wake-up call for policymakers. The energy transition cannot be compromised by short-term revenue maximisation. We urgently need a regulatory framework that ensures long-term investment security, fosters healthy market competition, and supports stable electricity prices.”

To mitigate current risks, the Foundation proposes the following measures:

• Introduction of two-sided Contracts for Difference (CfDs): These would offer financial stability for project developers, lowering overall system costs and reducing risk premiums that are currently driving up electricity prices.

• Limiting bidding volumes per participant: This would preserve market diversity, prevent over-concentration, and reduce the state’s dependence on a handful of large players with massive project portfolios.

• Realistic and targeted prequalification criteria: Designed to prevent speculative bidding without excluding serious market participants, potentially aligned with instruments such as the EU’s Net Zero Industry Act.

• Inclusion of meaningful qualitative criteria: For example, assessing the CO? footprint of logistics or encouraging innovation in system integration.

High auction revenues – But at what cost?

Despite headline-grabbing income figures, the actual benefit to end consumers is limited. The study estimates that the maximum possible reduction in the offshore grid surcharge (Netzumlage) would be just 7.4%, and even this only if the awarded projects are fully realised—an outcome far from guaranteed, as 90% of the bid payments are only due after project commissioning.

Moreover, the pressure to cut costs following high bid commitments could lead developers to favour low-cost suppliers, particularly from China, who benefit from strong state subsidies. This may put additional strain on Europe’s own offshore wind supply chain.

Growing risk of project cancellations

A further risk lies in project viability. Due to increasing geopolitical, regulatory, and market uncertainties, developers may find certain projects financially unfeasible. In such cases, they could legally withdraw, potentially leaving a major gap in Germany’s energy transition plans.

A European context

The Foundation’s report also responds to a recommendation from the European Commission’s Wind Power Package (October 2023), which urged Member States to analyse the effects of uncapped bidding structures on offshore wind development. Germany had previously lacked a detailed national analysis in this area.