Photo: WindEurope
Germany’s second offshore wind auction in 2025 failed to attract bids from developers, sending a clear signal that the country’s wind auction design, which relies on negative bidding, is not fit for purpose, WindEurope has warned. Instead of swimming against the tide, Germany should follow in the footsteps of other European countries and switch to contracts for difference (CfDs), according to the European wind industry association.
The auction covered two offshore wind sites in the North Sea with a combined capacity of 2.5 GW, but no developer placed a bid. That should be a wake-up call for the German government, according to Viktoriya Kerelska, Director of Advocacy & Messaging at WindEurope.
In negative bidding, developers offer the amount of money they are willing to pay for the right to build a wind farm, with the highest bid most likely to win. In the CfD model, on the other hand, they bid the electricity price they need, and receive compensation from the government if the market price falls below that level.
Kerelska: Negative bidding reduces the number of companies willing to participate in auctions
Negative bidding does not offer any revenue stabilization and exposes bidders to risks that go beyond their control. The uncapped negative bidding further intensifies the financial pressure on offshore wind developers by asking them to pay high sums for the right to develop an offshore wind farm, according to WindEurope.
“Negative bidding adds costs that make offshore wind more expensive and reduces the number of companies willing and able to participate in auctions,” Kerelska stated, adding it is time to amend the auction model so Germany can deliver on its offshore wind targets and industrial competitiveness.
Wind energy provides 30% of all electricity consumed in Germany, making it crucial for ensuring competitive prices for households and industry as well as energy security, WindEurope noted.
CfDs ensure lower financing costs and more predictable revenues
Most countries in Europe have introduced two-sided CfDs as a revenue stabilization mechanism for offshore wind development. It ensures lower financing costs and more visibility on future revenues, WindEurope said, noting that Denmark was the latest country to switch to CfDs after its 3 GW negative bidding offshore wind tender failed to attract any bids last December.
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