No Subsidies Needed in Germany’s Latest North Sea Wind Deal

German consumers will soon begin receiving subsidy-free electricity from two large wind farms in the North Sea, after Danish wind giant Dong Energy won a government tender to build about 700 MW of capacity at the OWP West and Borkum Riffgrund West 2 projects.

“In the same auction, a German power company called EnBW won a no-subsidy bid for a project called He Dreiht, and Dong won a third project called Gode Wind 3 with a guaranteed electricity price of 60 euros (US$64) per megawatt-hour,” the New York Times reports.

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“Offshore wind is categorically proving its competitiveness,” said Jochen Homann, president of the Bundesnetzagentur, Germany’s electricity auction agency. “This is good news for all electricity consumers who contribute to funding renewable energy.”

In a release, Dong said it based its pricing on the high wind speeds at the offshore sites—and on the expectation that, by the time construction concludes in 2024, manufacturers will have introduced a new generation of bigger turbines.

“In recent years, turbine makers like General Electric in the United States, Vestas in Denmark, and Siemens in Germany have produced larger and more powerful machines up to 600 feet high,” the Times reports. “That means more power can be produced by fewer windmills, reducing costs.”

Dong also expects wholesale electricity rates to increase from their current threshold of $40/MWh ($0.04/kWh).

“The biggest uncertainty may be future electricity prices,” the Times warns. “Dong, without disclosing precise figures, says it expects power prices to rise in Europe, as nuclear and coal-fired power plants are retired, increasing demand for new sources. Analysts, though, say that fast-growing renewable energy sources like wind and solar may bring electricity prices down.”