Auctions for renewable energy in Germany: first results and lessons learnt

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1 Fr ur envirnment Westminster Energy, Envirnment & Transprt Frum Keynte Seminar Auctins fr renewable energy in Germany: first results and lessns learnt Prf. Dr. Uwe Leprich Head f Department I 2: Climate Prtectin and Energy Lndn, 7th Nvember 2017

2 Frm FiT t Auctin Schemes EEG 2012 Vluntary market premium Fr PV indicative capacity cap ( atmender Deckel, 2,5-3,5 GW/a) EEG 2014 Obligatry market premium + mandatry direct marketing Pilt auctining scheme fr PV (400 MW/a) Indicative capacity cap fr further expansin f key technlgies EEG 2017 Auctining systems fr rughly ¾ f additinal renewables Fixed capacity caps fr key technlgies Technlgy neutral auctining pilt fr PV and Onshre Wind What s next?

3 Cmmn Principles fr the Auctin Schemes Different market envirnments: Technlgy specific auctins Technlgy specific prequalificatin criteria; timeframes and penalties Restraining factr: restricted auctined vlumes Awarding prcedure: nly price is decisive (single-criteria-auctin) Bids n flating market premium (ct/kwh) Pay-as-bid Exemptins frm auctins: installatins 750 kw and new installatins using bimass 150 kw pilt wind energy plants (125 MW/yr) hydr and gethermal pwer plants

4 Auctin Scheme Phtvltaics All PV installatins > 750 kw; 600 MW/a in ttal Grund munted PV installatins (cnversin areas, clse t mtrways) Rftp installatins PV installatins installed n ther physical structures (e.g. landfills) Opening clause fr Federal States : In rder t achieve mre cmpetitin in auctins, Federal States can authrize either the use f arable r grass land fr installing PV systems in certain regins (disadvantaged regins accrding t EU definitin). Vlume: max. 10 MW, Maximum price: 8,91 ct/kwh dependent n the breathing degressin cap ; transfer t ther site pssible but with discunt Realisatin perid: 24 mnths, Bid bnd: 50 /kw Prequalificatin: admissin by lcal authrities and/r area develpment plan

5 Results Phtvltaics (fr grund munted PV) Tendered vlume: MW per rund Bidden vlume: 3 6 times higher Surce : BMWi

6 Realizatin rate: results s far Phtvltaics Realizatin time frame clsed Realizatin f tendered PV prjects (10/2017) Auctin runds Awarded capacity [MW] Installed capacity [MW] Surce: UBA 2017 n basis f BNetzA

7 Participant Structure in the PV Pilts Phtvltaics 30 Winners Zuschläge 25 Anzahl Nat. Persnen GbR GmbH GmbH & C. KG AG/SE eingt. Genssenschaft ander jur. pern 0 Zuschlag Zuschlag Zuschlag Zuschlag Zuschlag Rund 1 Rund 2 Rund 3 Rund 4 Rund 5 Surce: UBA 2017 n basis f BNetzA

8 Lessns learnt Phtvltaics Higher cst degressin than expected Higher realizatin rates than expected N chances fr cperatives and small enterprises Threshld fr bligatry participatin < 100 kw?

9 Auctin Scheme (1) Wind nshre Framewrk cnditins: : MW per year, 4 auctins (700 MW each) Frm 2020: MW per year, 3 auctins Pay as Bid Pre-qualificatins: Maximum bid price: auctins in 2017: 7 cent/kwh auctins frm 2018: average f highest awarded bids f last three auctins +8 % Building permissin (BImSchG) Bid bnd: 30 /kw (paid back after prject is realised successful and in time) Realisatin perid: Within 24 (withut penalty) t 30 mnths (penalty), therwise award expires Awarded price crrectin: Depending n site quality (wind speed) Up t factr 1,29 fr lw and up t factr 0,79 fr high wind speed sites Objective: cmparable cmpetitive cnditins and equal installatins natin-wide

10 Auctin Scheme (2) Wind nshre Definitin f energy cmmunities (EC): at least 10 natural persns are members with vting rights n member has mre than 10% f the vting rights at least 51% f the vting rights are with natural persns that live mre than 1 year in the regin f the prject EC had n prject within the last 12 mnths Special frame cnditins fr energy cmmunities: Pay as Bid unifrm pricing (highest awarded bid) Pre-qualificatins: Building permissin (BImSchG) n permissin necessary Bid bnd: 30 /kw 15 /kw large cmpetitive advantage Realisatin perid: Within (withut penalty) t mnths (penalty),

11 Results Wind nshre 1. Rund Rund Bid vlume MW MW Awarded amunt ttal 807 MW EC 775 MW (96 %) 958 MW (95%) EC withut permissin 742 MW (92 %) 953 MW (94 %) actual EC? Awarded bids Highest price (=EC) 5,78 ct/kwh 4,29 ct/kwh Average price 5,71 ct/kwh 4,28 ct/kwh Lwest price 5,25 ct/kwh 4,16 ct/kwh EC: energy cmmunities - 25 %!

12 Lessns learnt Wind nshre Special cnditins fr energy cmmunities have been defined in rder t ensure a brad variety f small participants Instead a large number f small enterprises have newly been funded by larger cmpanies just t fulfill the requirements Mst f the winning prjects have been ffered by these newly funded cmpanies Since these prjects must nt be realized befre the year 2021 it culd happen that the targets will nt be reached in the next 3-5 years

13 Auctin Scheme Wind ffshre Target: 15 GW installed capacity in 2030 (accumulated Nrth and Baltic Sea) Transitin phase 2021 t 2025: Open fr existing prjects (lcated in Nrth Sea zne 1 and 2 and Baltic Sea) One auctin each in 2017 and 2018, MW each Maximum bid price: 10 ct/kwh; Bid Bnd: 100 /kw Cmmissining: : 500 MW pa (2021 Baltic Sea nly!), : 700 MW/a The Central Mdel 2026 t 2030: One auctin per year starting 2021, MW per year Cmmissining starting frm 2026 Pre-explred sites nly (eligibility, ptential capacity in MW) Maximum bid price: lwest awarded price in 2018 Bid Bnd: 200 /kw

14 Results Wind ffshre First auctin (1 st April 2017) Bid / Offshre- Windpark* Psitin Awarded amunt Awarded price DONG Energy Brkum Riffgrund West II GmbH DONG Gde Wind 03 GmbH DONG Nrthern Energy OWP West GmbH EnBW He Dreiht GmbH Nrth Sea Cluster 1 Nrth Sea Cluster 3 Nrth Sea Cluster 1 Nrth Sea Cluster 7 Ttal 240 MW 0,00 ct / kwh 110 MW 6,00 ct / kwh 240 MW 0,00 ct / kwh 900 MW 0,00 ct / kwh MW

15 Lessns learnt? Wind ffshre 3/4 prjects 0,00 cent/kwh Successful Bidders: Large Cmpanies (with public invlvement): Wh bears the risks? Cmmissining after 2020 Bet n higher electricity tariffs at stck exchange at the time f cmmissining! Bet n lwer cst/kwh thrugh technical innvatin (rtr size, capacity)? Transitin phase auctin: MW awarded Intense cmpetitin (23 prjects, MW) Sunk cst? Realizatin rate?

16 Auctin Schemes: a success? Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1 Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4 PV Wind TüAUS Slid evaluatin nt pssible befre Imprtant criteria: Efficiency Realizatin rate Acceptance (fundamental fr Energiewende) Precnditins: Clse mnitring f auctin results is necessary Plitical ability t respnd fast is necessary (e.g. energy cmmunities)

17 Thank yu very much! Uwe Leprich