An offshore wind park in the North Sea is to be built without feed-in subsidies for the first time, in a sign that renewable energy is becoming more competitive. Both the environment and consumers are likely to benefit.
German authorities have approved four offshore wind park projects in the North Sea, including one that is to be built completely without the state subsidy that has been usual up to now under a scheme aimed at encouraging renewable energy.
The projects approved on Thursday have a total capacity of 1,490 megawatts, according to the Bundesnetzagentur, which supervises companies' access to Germany's power grid.
According to energy supplier EnBW, the wind park "He Dreiht," with a capacity of 900 megawatts - comparable with the output of a nuclear power station - will be built without any subsidy at all. The three other parks, producing some 600 megawatts, will on average receive a subsidy of 0.44 cents (.47 US cents) per kilowatt hour fed into the grid - much lower than current subsidies for solar plants and wind turbines on land.
It also massively undercuts the subsidy currently paid for offshore wind parks, which can reach 18.4 cents per kilowatt hour, although this is paid for only eight years, while the new projects will be subsidized for 20 years.
The newly approved projects are to start feeding into the grid after 2021.
Almost a quarter of the price of electricity in Germany paid by consumers goes into subsidies for renewable energy as the country attempts to reach its goal of generating 80 percent of its energy from renewable sources by 2050.
The president of the Bundesnetzagentur, Jochen Homann, said he was surprised at the outcome of the first round of tenders for wind parks, and that consumers stood to benefit in the long run.
"The average weighted award price of 0.44 cents per kilowatt hour is far below expectations. This shows the auction has unlocked medium and long-term cost reduction potential, which will lead to a reduction in funding to an extent that had not been expected," Homann said.
"Offshore wind energy is categorically proving its competitiveness. This is good news for all electricity consumers who contribute to funding renewable energy through the renewable energy surcharge," he added. But he warned that the prices could go up in the next round, which is due next year and will also include tenders for the Baltic Sea.
Wind energy industry representatives say that the price of building offshore wind parks has gone down considerably as more are constructed, and that higher electricity prices are expected on the stock market, meaning that the parks will make enough profit even without subsidies.