Wind

Turbine makers fear supply chain stress from German 'return option' for wind farm deals

Group representing OEMs lobbies to exclude projects that already have started work

VDMA Power Systems managing director Dennis Rendschmidt.
VDMA Power Systems managing director Dennis Rendschmidt.Foto: VDMA Power Systems
Wind manufacturers are worried about the impact on the supply chain of a German government plan to grant successful bidders from onshore wind tenders in the past two years the chance to hand back capacity secured in auctions, Recharge has learned.
The cabinet of Chancellor Olaf Scholz had approved the measure earlier this month, which after finding its way into the text of an amendment of Germany’s energy price control act could be approved by parliament by early July.

Winning projects from auctions in 2021 and 2022 with a combined volume of about 5GW have not yet been realised, according to the economics and climate ministry.

While the government hopes that the so-called ‘return option’ for successful wind energy bids may help avoid projects not being built due to significant cost increases, manufacturers are lobbying for the proposal to be amended to stop wind farms that already have started construction halting works in order to secure a higher bid value in future auctions for the same project.

“Returns that are only aimed at higher market premiums should be avoided in order not to delay the [wind power] expansion,” Dennis Rendschmidt, managing director at VDMA Power Systems, a group representing wind OEMs and suppliers, told Recharge.

“Such a delay would disrupt supply chain processes that have already been planned, is not in line with the political expansion targets and could lead to deadweight effects that must be avoided.”

Talking to Recharge, a major wind turbine manufacturer has cautioned that otherwise supply chain planning could be interrupted, delaying the recognition of turnover. That ultimately would also result in rising energy costs for taxpayers, while there could also be less additional capacity helping to depress power prices in times of possible scarcity, such as the next winter in Europe.

The OEM also argued that winners of auctions in 2021 should have few difficulties as cost increases in the industry where then still mainly absorbed by manufacturers, which began pushing through higher turbine prices only in 2022.

VDMA Power Systems therefore has asked the legislator to amend the legal text in a way that makes sure that only projects will profit from the ‘return option’ that when the legislation comes into effect are not in the execution or implementation phase or have not been put into operation.

The group said this is the only way to make sure that projects that are economically viable won’t be delayed further.

(Copyright)
Published 14 June 2023, 07:41Updated 14 June 2023, 07:41
EuropeGermanyVDMA Power Systems