German plan for joint wind-solar power tenders meets opposition

26 April 2017 15:05 Source:ICIS

Germany’s economy ministry is “optimistic” that the government will approve regulation for testing joint onshore wind and solar power subsidy tenders before the summer break in July.

This is despite the renewable energy industry being against the joint tenders, while experts have doubts about their effectiveness in Germany.

The European Commission’s position is that technology-neutral tenders could achieve renewables expansion at a lower cost than technology-specific tenders.

Last year, the commission approved Germany’s renewables subsidy system on the condition that the country tested joint onshore wind and solar tenders. In 2018-20, subsidies for 400MW should be offered annually at joint tenders.

Direct competition?

Previously the economy ministry had been unsure whether the regulation, which does not need parliamentary approval, could be passed before parliamentary elections on 24 September ( see EDEM 28 March 2017 ).

A consultation on the draft regulation closed on Monday. The ministry is yet to publish responses, but Germany’s renewables association BEE published its position on Tuesday. BEE said it agreed with German wind industry association BWE and solar union BSW that it is not a good idea to put the two technologies in direct competition.

Joint tenders might lead to the dominance of one technology, which would create a higher concentration of production on specific hours, according to BEE. With high solar capacity, generation would be concentrated around noon while with high wind capacity, it would be very high amid storms.

This would exaggerate grid stability problems, just like a higher geographical concentration of renewables capacity that joint tenders might lead to, BEE said.

The proposed tender design does aim to take into account distribution grid investments when ranking bids, but its complexity makes it difficult to estimate the outcomes.

Joint tenders provide insufficient planning security and might lead to distorted rather than fair competition, the association said.

Wind advantage

Wind power is likely to remain cheaper than solar in Germany, mainly because of higher capacity factors, said Marcel Munz, energy expert at PA Consulting. This measures the average generation compared to installed capacity. In Germany, onshore wind capacity factors are 20-30% compared to 8-12% for solar.

”In a country like Spain with more sun, solar could be more competitive,” Munz said. ”In Germany, I just don’t think technology-neutral renewables tenders are feasible between solar and wind.”

The complex design would be necessary to create competition between the two technologies, said Daniel Peschel, analyst at consultancy enervis. With a straightforward design, onshore wind projects in northern Germany would dominate, he said. But with the proposed design, it is not clear which technology would be more successful.

But it remains to be seen whether joint tenders will work as intended, Peschel said. laura.raus@icis.com

By Laura Raus