Billion-dollar offshore wind projects before closure?

Berlin. Project developers have offered billions of dollars to auction licenses for wind farm areas on the high seas. But now, for many, their stakes seem too high. The construction of wind farms is becoming increasingly unlikely. The billion-dollar bids in the auction of licenses, which have long been criticized in the wind power industry, are now proving to be a heavy burden, especially since companies have to invest billions more in building wind farms.

This has consequences for the entire supply chain. Because if the projects are not implemented, the billion-dollar orders for turbine manufacturers and other suppliers will also not be received.

There are therefore increasing calls in the industry to release the space and reallocate it. "We are dealing with zombie projects here. They paralyze the entire value chain," said Karina Würtz, managing director of the Offshore Wind Energy Foundation, to Handelsblatt.

According to the current legal situation, a voluntary return of licenses is not possible. The Offshore Wind Energy Act (WindSeeG) stipulates a construction requirement. Exceptions only apply if a project is delayed for reasons for which the project sponsor is not responsible.

With the current amendment to the WindSeeG, the legislature could introduce a voluntary return option. But the draft law from the Federal Ministry of Economics, which the Federal Cabinet passed at the beginning of September, does not include this: “A unilateral return of surcharges is still not planned,” it says. The reason for this is to ensure the “binding nature of the tendering process”.

However, Würtz's argument is not convincing: the ministry is retreating from focusing on commitment, the expert said. Legal certainty is a valuable asset. “Planning security only comes about with the final investment decision anyway,” she emphasized. But if these investment decisions were not made and the projects were not implemented, “that would mean a massive setback for turbine builders, foundation and cable manufacturers and all other suppliers,” said Würtz.

The Federal Association of Offshore Wind Energy (BWO) also warns of this development. According to BWO, a project and procurement volume of up to 50 billion euros is at risk. For 16 gigawatts (GW) of a total of 17.8 GW, which were awarded at the auctions in 2023, 2024 and 2025, the BWO is also demanding that the bidders be allowed to return the space.

To put it into perspective: Wind farms with 10.8 GW are currently in operation in the German part of the North and Baltic Seas. This corresponds roughly to the output of ten large coal-fired power plants.

Würtz feels encouraged by a report from the Scientific Services of the German Bundestag. It states that the current WindSeeG fundamentally does not allow a general possibility of voluntary return: This possibility would therefore have to be expressly created by law, according to the report.

The Scientific Services generally consider this possibility to be possible. "The findings of the scientific services are clear: It is legally possible to design a return mechanism. You just have to want it," said the expert.

In theory, license holders can let a lot of time pass without taking action. Only if they do not reach certain milestones can the infrastructure supervisory authority, the Federal Network Agency, revoke the award. This will not be the case until autumn 2027 at the earliest.

According to experts, however, this would have massive consequences for the offshore infrastructure: a “rupture of the thread” would then be unavoidable, warned Würtz. A large part of the project development would then have to start again, she said: “Orders for the entire supply chain will then be missing for years.”

Interruptions would also have serious consequences for the power grid operators Tennet, Amprion and 50Hertz, which are responsible for connecting the offshore wind farms to the grid. Stefan Kapferer, CEO of 50Hertz, told the Handelsblatt that there must be the possibility of taking back space and reallocating it if the project does not progress. He said: “Up to 16 gigawatts of offshore wind capacity is currently on hold, with its actual realization uncertain.”

At the same time, according to him, the transmission system operators are investing billions in cable and converter technology and are thus making advance payments. "This disparity poses significant economic risks. It is necessary to establish binding new milestones before the final investment decision," said the 50Hertz boss.

Tim Meyerjürgens, CEO of Tennet Germany, argues similarly. He told the Handelsblatt: "What is crucial now is not to reward speculation, but rather to enable implementation. Offshore areas and grid connections are too valuable to be left unused for years." He also said that more commitment and early clarity about the projects' chances of being realized are needed. Amprion made a similar statement.

The current problems are ultimately the result of an auction process that has long been viewed critically in the industry. It was worth a total of 16.6 billion euros to project developers between 2023 and 2025 to win the contract for wind farm areas in the North and Baltic Seas. Doubts arose early on as to whether it would be possible to operate the wind farms to be built economically given these horrendous amounts.

In the auction of land in summer 2023 alone, the successful bidders were prepared to pay 12.6 billion euros. These bidders included Total Energies and BP.

Iris Stempfle, managing director of the German subsidiary of Jera Nex BP, rejects the criticism of the Offshore Wind Energy Foundation. She sees the responsibility as lying with the companies that establish the parks' network connections.

But be prepared for additional delays. In both cases there is no reliable grid connection date, she criticized. As long as this uncertainty persists, the projects cannot be pushed forward responsibly.

Total Energies, meanwhile, is trying to renegotiate the two areas it auctioned in 2023: The company said in June that it had started discussions with the German authorities to determine the conditions under which the company could return a concession "as this license is negatively affected by delays and uncertainties".