The EEG originally provided for a pure feed-in tariff-based support system. The EEG 2014 first introduced a tender model for greenfield solar projects.
In January 2017, a further major revision of the German Renewable Energy Sources Act (“EEG 2017”) came into force, alongside a separate law regulating the expansion of offshore wind (“WindSeeG”). Among other changes, it replaced the fixed tariff for wind, solar and biomass with a market-based tender model with predetermined capacity volumes being auctioned in each tender. For offshore wind, the feed-in tariff-based support system still applies for all wind turbines commissioned prior to 1 January 2021. The financial support for other renewables – hydropower or geothermal plants – and for small plants continues be determined by law.
The legislator expected this systemic change both to decrease the cost of the governmental subsidy and to increase competition and diversity between the players. It also aligned the German support system with the EU Guidelines on State Aid for Environmental Protection and Energy 2014-2020 (2014/C 200/01). In addition, the system grants more control over the increase in installed capacity, as tender volumes are based on growth targets. The results of the first tenders in 2017 demonstrated that the renewables industry seems to be willing and able to accept lower support – or, in the case of some offshore wind projects, no support at all.
The price for offshore wind energy dropped to an average of 0.44 Cent/kWh in the first offshore tender in 2017. Three of the four successful projects bid zero and are Europe's first offshore projects without any subsidy. The 2018 tender still included a bid with zero subsidy. At the same time, the highest successful bid was awarded with a subsidy of 9.83 Cent/kWh. There were no tenders in 2019 and 2020, as the planned growth of offshore capacity had been reached by the 2017 and 2018 tenders.
However, the tender rounds also showed flaws in the system, especially for onshore wind. While the support dropped significantly in the first 12-18 months of the tender system, it has since started to increase again. In addition, almost all tender rounds for onshore wind in 2019 and 2020 were significantly undersubscribed and installed capacity for onshore wind dropped from 5,009MW in 2017 to 2,273MW in 2018 and to 1,078MW in 2019.
Winning prices in Cent/kWh of the latest German tenders for onshore wind, offshore wind and solar and the lowest average prices in prior tenders:
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Tender result in Ct/kWh
The tenders are organised by the Federal Network Agency which publishes tender dates, volumes and maximum prices in advance and tender results afterwards. Bidders must provide security and implement the winning projects within a predefined period or pay a penalty. However, to assist projects with delays caused by the Covid-19 pandemic, the Federal Network Agency temporarily does not publish tender results but notifies bidders individually as publication starts the implementation deadlines. Tenders are performed between twice and seven times a year, depending on the technology. For onshore wind and solar, in December 2018 the legislator introduced additional tender rounds and capacities for the years 2019 to 2021 to counteract reduced growth in installed capacity and to ensure political targets can be met. For onshore wind this did not solve the problem caused by undersubscription of tenders.