German wind power output down in 2016, feeds 2017 premium

Early analysis of this year’s German power market points to a drop in the rate at which new wind farms will be added to the grid, as well as a potential decrease in wind power output itself.

This would continue a trend that began last year, with reduced average wind power generation in Germany in 2016 compared to 2015, according to transmission system operator (TSO) data, while the rate at which new wind installations were added to the grid also slowed for the first time since 2010.

Looking at how the first month of 2017 is shaping up, a combination of TSO data and ICIS analyst forecasts suggests that wind power output will fall month on month and year on year in January of this year to an average of 10.3GW.

Milder weather meant that despite less wind power, 2016 still delivered lower in Germany in terms of electricity prices, at €29.27/MWh compared to €40.82/MWh for 2015, according to a combination of ICIS Day-ahead, Weekend and Bank Holiday assessments.

ICIS assessments of forward contracts for 2017 delivery and latest trade data suggest that this year is on course to deliver at a premium to last, at an outright value of €35.70/MWh, affected by a cold winter and nuclear outages as well as lower wind.

Wind power deployment is expected to slow this year, as the government has removed feed-in tariffs and replaced them with competitive auctions. The annual tender volume for new onshore wind projects has been capped at 2.8GW, although German wind power lobby groups forecast offshore capacity additions to increase from 818MW in 2016 to 1.4GW this year. Offshore capacity additions will then fall to 1GW in 2018 and 2019, say the lobby groups.

If onshore wind is added at capacity and offshore wind proceeds at the forecast rate, 8.8GW of generation could be expected in 2017, 9.4GW in 2018 and 10.0GW in 2019.

Last year’s performance

According to data compiled from 50Hertz, TenneT, Amprion and TransnetBW, average wind power production was 8.5GW in 2016, compared to 8.6GW the year before. Wind power’s contribution to the German electricity mix also fell marginally, from 16.7% in 2015 to 16.6% last year, according to data from Fraunhofer ISE.

Cumulative installed wind capacity is likely to have increased from 44.5GW to 49.6GW, according to offshore data from wind energy industry group BWE and an onshore estimate from wind research group Fachagentur Windenergie.

Average load factor therefore decreased from 19.3% in 2015 to around 17.2% in 2016, although this would still be the second-highest figure this decade.

Monthly generation data suggests that after a very windy February, low output in what are typically the windiest months at the end of the year caused 2016 to fall behind the previous year.

June also saw the lowest monthly generation since September 2014. william.peck@icis.com