Onshore wind prices in Germany just plummeted again

Auction prices have dropped by a third in the last six months

Aerial view of a wind farm in Husum, Germany. Photo by Patrick Lux/Getty Images

The predicted price of onshore wind in Germany is now half the EU’s projections for 2030, following an auction in Germany this week.

The auction results were described as “incredible” by one expert.  

The average price at which contracts were awarded in the 1GW auction was €38/MWh, the German regulator Bundesnetzagentur announced on Wednesday (pdf).

That’s a drop of one third on the price from six months ago and a drop of 10% since the previous auction in August.

Once distribution and transmission costs are factored in, the figure is likely to be closer to €40/MWh.

The bids are based on companies’ predictions for the next few years, as they now have four and half years to complete their projects. If a bidder finds they cannot profitably provide energy at the price agreed, they must pay a penalty fee to withdraw.

Bundesnetzagentur said the bids were based on “anticipated positive developments in plant technology and falling prices.”

EU predictions

The news came as Vice President for the Energy Union Maroš Šefčovič announced that the European Union would hike its renewables target for 2030 in response to the falling cost of renewables. He said it was now affordable to raise the current 27% target to 30%.

Last year the European Commission predicted onshore wind costs of €80/MWh for 2030 and €75 for 2040, which include the costs of distribution and transmission.

Jonathan Gaventa, director of climate and energy think-tank E3G told Unearthed:

“The Commission’s figures are really badly out of date.There are a few reasons for the incredible results from the auction. It’s a mature market in Germany, the cost of financing is very low and they have a strong service industry.”

Gaventa added: “There is always a question about whether they will be delivered but in this case the auction was significantly oversubscribed and there seems to be confidence in the results”.

German onshore wind prices are among the cheapest in Europe, although a recent auction in Spain saw prices fallto €33/MWh.

Meanwhile in the UK

The auction means that the price of onshore wind in Germany will soon be at almost a third of the price of energy from the new Hinkley nuclear power plant in the UK. The government signed a contract with French firm EDF to guarantee the price at £92.50 (€104), but these are 2012 prices so the actual price is now closer to £100 (€112).

Onshore wind farms could now be built in the UK for almost half this cost (£50-55), according to a report released in July by top engineering consultancy Arup.

Meanwhile the price for offshore wind has halved over the past two years, meaning it is now much lower than energy prices for Hinkley and even competitive with gas.

Analysts have described the tumbling prices for wind power as an “energy revolution.”

David Cameron said in the run-up to the 2015 general election that “enough is enough” for rollout of onshore wind turbines in the UK. Shortly afterwards, the government ended subsidies for the onshore power source and has blocked it from competing against other forms of energy for contracts.

But energy ministers Claire Perry and Richard Harrington recently indicated at the Conservative party conference that this could be about to change.