Subsidy-Free Offshore European Wind Bids On The Rise: GlobalData Report

Highlights :

  • The report also said several factors have also led to the undersubscription of renewable energy auctions. 
Subsidy-Free Offshore European Wind Bids On The Rise: GlobalData Report

The latest report by GlobalData, a data and analytics company, claimed that European countries are witnessing increased subsidy-free wind energy bids due to intense competition. However, the report said several factors have also led to the undersubscription of renewable energy auctions. 

GlobalData’s latest report titled ‘Europe Renewable Energy Policy Handbook 2023’ pointed out that the zero-subsidy bids are gaining traction across the continent. The report attributed the under-subscription to increased raw material costs, rising logistics expenses, higher interest rates, and prolonged approval procedures. “As a result, there is a need to address the underlying challenges to ensure the sustainable growth of the renewable energy sector,” the GlobalData report said. 

“For instance, in December 2021, RWE won a zero-subsidy tender for the 1GW of an offshore wind project in Denmark. A similar trend was witnessed in Germany, as a 658 MW project in the North Sea and a 300 MW site in the Baltic Sea closed at zero-subsidy bids. The latest auction concluded in Germany in September 2022 for a 980 MW project in the North Sea was also won by RWE, at a zero-subsidy bid,” a media statement from the firm said. 

“Advancements in technology and the estimated costs of producing electricity during the commissioning of offshore wind power plants have enabled them to let go off government subsidies confidently,” Attaurrahman Ojindaram Saibasan, Power Analyst at GlobalData said in a statement regarding the outcome of the report. 

In October 2021, the Danish Energy Agency (DEA) announced that no bid was received for the technology-neutral tender in June 2021. A similar scenario was witnessed among other major European nations in 2022. As a result, it was an underwhelming year for German solar PV auctions, with both ground-mounted and rooftop auctions underperforming. A total of 4,858MW capacity was offered, of which only 2,897MW were subscribed.

Of the total ten rounds of renewable energy auctions conducted for Category A in Italy, only the first auction’s planned capacity was fully allocated. As a result, between 2019 and 2022, a total of 7.3GW planned auctions were conducted, of which only 3.9GW of projects were awarded, which is a little over half of the capacity offered.

Spain introduced updated auctions in 2021, which received a tremendous response initially, with both auctions being oversubscribed that year. However, in 2022, the two rounds of auctions failed, with only 223MW capacity awarded against the auctioned capacity of 3,820MW.

Similarly, in France, the auction program underperformed between 2018 and 2022 due to the low ceiling price set by the government and additional scrutiny of bid applications. However, the last solar PV self-consumption round conducted in 2022 received an overwhelming response. The awarded capacity exceeded the auctioned capacity, a positive for the French renewable auctions in 2023.

Saibasan said, “Developers across Europe find it extremely difficult to get approvals from government authorities, and the lengthy bureaucratic procedures discourage investments. As per the EU’s renewable energy directive, the member states are required to grant permits for new greenfield wind projects within two years, but this has not been the case. For example, it takes approximately five years to get an onshore wind project permit in Italy.”

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