Germany Is Said to Reset Rules for Onshore Wind Farm Auctions

(Bloomberg) -- Germany is planning to reset the rules on bidding for contracts to sell electricity from onshore wind farms, ending an advantage that projects backed by groups of citizens had over professional developers.

Citizen groups -- local alliances of voters formed to build wind parks -- were favored in auctions last year and the groups scooped most of the capacity of two tenders. After those competitions, the government temporarily suspended perks those groups had and now plans to make the temporary decision permanent, according to officials in parliament with knowledge of the government’s thinking.

Germany Is Said to Reset Rules for Onshore Wind Farm Auctions

The people from the Christian Democrats and the Social Democrats parties in the governing coalition asked not to be named because discussion about the policy remains confidential. They said the move is aimed at leveling the competition between citizen groups and commercial developers including Baywa r.e GmbH, PNE Wind AG and Juwi AG.

Previously, in an effort to soften local opposition to building wind farms, the government had allowed citizen groups to seek contracts before they get permits showing the project would make sense on environmental grounds. That loophole lifted a major cost and risk in developing a bid document, giving the citizen groups an advantage in the auctions.

Changes to the auction system will be put into a so-called “100 Day Law” amendment of a broader piece of legislation aimed at supporting clean power, the people said. Neither party wants to choke citizens’ participation in bidding. Instead, they’re seeking to limit the ability of those groups to distort competition by dominating the auctions, they said.

The amendment may become law before parliament’s summer recess. It may include provisions designed to boost the number of municipalities working as bidders, a step to ease concerns that most of the citizen groups are comprised of wealthier voters.

That benefit skewed the true cost of onshore wind, the BEW wind-industry federation has said. It also raised the risk of projects that don’t have access to funding winning most of the new capacity, which Germany needs to replace nuclear and coal power plants that Chancellor Angela Merkel’s government has promised to close.

Citizen groups scooped up 65 of the 70 projects on offer in 2017 before the government suspended their favorable terms. The government has had two auctions for onshore wind capacity this year and plans another two by the end of the year as well as two more in 2019.

Germany started auctions for wind capacity last year and is tendering about 2.8 gigawatt annually. In the contest in May, citizen groups won about 18 percent of 604 megawatt of capacity on offer.

Citizen alliances will continue to benefit from a game rule that links their successful bids in any tender to the competition’s highest winning bid, the people said.

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