Find out why virtually all the onshore wind farms winning the first auction in Germany are small projects developed by grassroots initiatives and cooperatives, which are very popular across the country.
On Friday, Germany unveiled the results of their first onshore wind auction held under the new Renewable Energy Sources Act, which came into force on 1 January 2017. The tender was held on 2 May with an initial quota of 800 megawatts (MW), but finally the authorities allocated 807 MW in 70 projects. Each one of these projects will be entitled to receive a certain level of tariff, obtained through the competitive process of the auction, during 20 years. The capacity-weighted average level of the tariff is 5.71 eurocents per kWh, which must be multiplied by a factor depending on the wind resource of the wind farm (the lower wind speed, the higher factor).
One of the most remarkable aspects of these outcomes is the high share of citizens’ energy cooperatives among the winners of the auction. According to the Federal Ministry for Economic Affairs and Energy, 93 percent of the awarded capacity was from citizens’ energy companies. 65 of the 70 awarded projects were carried out by cooperatives formed by citizens, with ‘small’ projects of less than 18 MW.
It’s true that such cooperatives can participate in auctions under easier conditions (e.g. lower guarantees, easier pre-qualification requirements, or the entitlement to receive the highest awarded bid value of the auction). However, the grassroots initiatives have a big support in Germany, where community energy projects selling their electricity in the markets are very popular, counting around 1,000 energy cooperatives around the country (official figures claimed 812 cooperatives in 2015).
According to the National Office for Energy Cooperatives, in 2015 there were 165,000 private individual members taking part of these cooperatives. The average participation per member was 3,652 euros, and they obtained an average dividend payment for this investment of 3.89%.
This is, there are lots of Germans willing to risk their money in the renewable energy industry with two only targets: build a wind farm in the area where they live, and receive a financial compensation for the investment. It’s true that they count with the guarantee of the German legislation, which secures a certain level for the tariff of the sold electricity, but there is still a risk if the wind farm is built with higher costs, or the wind resource is lower than the initially forecasted, and some of these grassroots may prefer to put their money in other business.
Thus, in 2010, 51% of installed renewable capacity in Germany belonged to individuals, and they can claim that the famous German ‘Energiewende’, the energy transition from coal and nuclear to renewables, is supported by the people.
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