Ministry of Economics and Technology of Federa : Gabriel: Pilot auction rounds for ground-mounted PV installations were a complete success

Press Release

2016-1-13

© BMWi/Holger Vonderlind

The renewable forms of energy are no longer niche technologies, they have long since matured. Therefore, the level of funding shall in future no longer be fixed by the state, but rather be determined by way of competition on the market. The report on the experience made with the 2015 pilot auctions for ground-mounted PV installations presented by the Federal Ministry for Economic Affairs and Energy, which was adopted by the Federal Cabinet today, shows that the instrument of auctions is successful and works well. All three auction rounds attracted a large number of competitors, and the price level gradually fell. This is good news especially for electricity consumers. Many different players submitted bids, and small bidders and projects also won funding. The report on the experience made shows that the instrument of auctions works well.

Federal Minister for Economic Affairs and Energy Sigmar Gabrielsaid: 'The pilot auctions for ground-mounted PV installations worked very well. The report shows that the auctions met with a great response by the market players. For this reason, we intend to introduce auctions for the funding of all renewable energies in a second step in the context of the 2016 Renewable Energy Sources Act (EEG 2016).Renewables have matured and have become a central pillar of our electricity supply. On the basis of the 2016 Renewable Energy Sources Act, we will further improve the integration of renewables into the market and expand their use in a targeted way. This is how we will continue to ensure the very high level of security of supply in Germany and at the same time guarantee cost efficiency and the greatdiversity of market players.'

The report on the experience made is the basis for the systemic change that had already been provided for in the 2014 Renewable Energy Sources Act. The level of funding for electricity generated on the basis of renewables is planned to be determined in the context of competitive bidding as from 2017 at the latest.

A total of three auction rounds for ground-mounted PV installations took place in 2015. The bidding procedure met with a great response by the market players and seems to be particularly suitable for large PV installations. All three auction rounds with a total volume of 500 megawatts were characterised by a high level of competitive intensity. In each round, the volume up for auction was considerably oversubscribed. The price level fell gradually (9.17 ct/kWh -> 8.49 ct/kWh -> 8.00 ct/kWh). This is an indication of the effectiveness of the bidding procedure. In all rounds, the level of remuneration was perceptibly lower than the maximum price and usually lower than the funding level fixed by the state pursuant to the 2014 Renewable Energy Sources Act. In addition, bidders of various legal forms participated in all auction rounds. In the second and third rounds, smaller market players also won funding.

As to the question whether the expansion targets will be reached, only preliminary conclusions can be drawn since the actual implementation date of the installation projects will be decisive. The bidders who won the funding must commission their installations within 24 months at the latest. Therefore, it is not yet possible to present final results. According to a survey conducted by the Federal Network Agency, however, most bidders underlined that they intend to build their installations within one year after they won the funding.

The report on the experience made shows that auctions work in the field of renewables provided that the bidding rules take full account of the characteristics of the relevant sector and the market segment. It is not recommended to apply exactly the same bidding rules to other renewable energies. However, many elements of the experience made with the pilot auctions for ground-mounted PV installations can also be used for other areas of renewable energies.

The report (in German) can be found here.

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