Electricity

WindEurope to keep pushing back against uncapped negative bidding in auctions

Dickson WindEurope keep pushing back uncapped negative bidding auctions

Photo: WindEurope

Published

July 18, 2023

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Published:

July 18, 2023

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BP and TotalEnergies committed at an offshore wind power auction in Germany to pay vast sums to be allowed to build the facilities, which caused a stir in the industry. WindEurope’s CEO Giles Dickson said the organization would continue to oppose unlimited negative bidding, arguing that the costs are passed on to consumers and the supply chain.

The European Union is about to reform the wind energy sector by introducing obligatory nonprice criteria in the auction design, WindEurope’s Chief Executive Officer Giles Dickson and Chief Policy Officer Pierre Tardieu pointed out. In their conversation published on the organization’s Windflix video platform, they stressed it is not yet clear if some conditions would be applied at the same time.

A more pragmatic approach would be to start with criteria like environmental protection or energy system integration separately, according to Tardieu.

Only four countries in Europe have negative bidding models

Turning to the latest offshore wind power auction in Germany, WindEurope’s top representatives argued that enabling and selecting negative bids were unfavorable for the industry’s future. It is a huge challenge, as ultimately the costs will have to be passed on to consumers or the supply chain, and both are struggling, they said.

Namely, oil and gas majors BP and TotalEnergies now need to pay between EUR 1.5 billion and EUR 2 billion per GW to German authorities for the privilege of building four facilities with 7 GW in total capacity in the North Sea and Baltic Sea.

“We gotta keep pushing back against this uncapped negative bidding in auctions. There’s only four countries in Europe that have this negative bidding model. Everybody else is on contracts for difference,” Dickson underscored.

Dickson: Raising price ceilings for onshore wind auctions was sensible

The CEO of WindEurope added that even onshore auctions in Germany, are conducted in a way that the government underpins the investors’ revenue. In France, 73 bids were accepted at a tender this month with the average at EUR 85.29 per MWh. The auction was oversubscribed at 1.8 GW, so the government awarded 1.16 GW instead of the planned 925 MW.

It was sensible that both Germany and France raised price ceilings, Dickson said and attributed it to taking the rising costs in the supply chain into consideration.

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