WindEurope has voiced criticism against the recent use of negative bidding in offshore wind auctions conducted by Germany and the Netherlands, stating it places undue financial strain on developers. Under this mechanism, developers bid the amount they are willing to pay for the right to build offshore wind farms, with higher bids having a better chance of securing project sites.
“Negative bidding adds to the costs of developing offshore wind farms, which ultimately impacts consumers and the wind energy supply chain,” said Giles Dickson, CEO of WindEurope. “It represents extra expenses that developers must bear, contrasting with the Contract for Difference (CfD) auctions used by most other European countries.”
In a CfD auction, developers bid the revenue they require, with the lowest bid winning. This ensures revenue stability for developers, even if market electricity prices exceed the agreed strike price, where governments compensate the difference.
Dickson emphasized the long-term implications of negative bidding, describing it as a short-term benefit for finance ministries but a lasting cost for society. He highlighted that in the recent Dutch auction, non-price criteria such as biodiversity protection and system integration were heavily considered.
“For instance, Vattenfall and Copenhagen Infrastructure Partners have committed to environmental initiatives like building an electrolyser facility powered by renewable energy,” Dickson noted. “These initiatives showcase the wind industry's contribution to ecological sustainability and system integration.”
In Germany, 90% of funds raised from negative bidding will go towards reducing grid levies, with the remaining 10% supporting maritime biodiversity and sustainable fishing practices.
