Germany announces first technology neutral wind & solar tender

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The Federal Network Agency of Germany has announced two joint tenders for utility-scale wind and solar projects. The first tender will open on 1 April, and close on 3 April 2018. This is the first renewable tender to put two technologies in competition. The agency plan to assign 200 MW of either wind and solar power in this round.

Eligible projects are on-shore wind farms with a minimum installed capacity of 750 kW, with Federal Network Agency approval issued three weeks before the bid date, and solar ground-mounted systems with between 750 kW and 10 MW generation capacity. The bidding cap for both technologies is EUR0.0884/kWh (US$0.10924/kWh).

Under the tender, although projects will not have to include costs for incurred local grid capacity expansions, solar developers will have to take into account additional costs for grid integration that will range, according to the agency, between EUR0.08 and EUR0.88 per kWh depending on the project’s location. For wind the additional cost will be between EUR0.07 and EUR0.58 per kWh.

The second tender has been scheduled for 1 November 2018. Another 200 MW will be allocated.

The technology-neutral auctions are being implemented upon request of the European Commission, which is requiring member states to introduce tenders that are competitive on a technological basis. The Commission believes technology-neutral tenders could achieve renewables expansion at a lower cost than technology-specific tenders.

However, the move has faced opposition from developers, including Germany’s renewables association BEE, German wind industry association BWE and solar union BSW. Joint tenders might lead to the dominance of one technology, which would create a higher concentration of production on specific hours. 

Wind power is likely to remain cheaper than solar in Germany, mainly because of higher capacity factors. As a result, generation would be concentrated around times of high wind, which would exaggerate grid stability problems.

Developers have also argued that joint tenders provide insufficient planning security and could lead to distorted rather than fair competition.

The Federal Network Agency has attempted to combat these potential problems through designing the tender process to take into account distribution grid investments when ranking bids, but its complexity makes it difficult to estimate the outcomes.