Global Onshore Wind Market Report

In the wake of the Russian invasion of Ukraine and a global energy crisis, Germany has decided to speed up its shift towards renewable energy by revising its current targets. In 2023, the European Union introduced Renewable Energy Directives (RED III) which increased the renewable energy expansion targets to 45% from the previous 32.5% by 2030. Germany has already adopted this “New Deal” and raised its renewable energy targets to 45%, with a target of 160GW of onshore wind energy by 2035 (BMWK DE, 2023). Furthermore, in December 2022, Germany announced a simplified permitting process policy for onshore wind projects, in line with the EU’s REPowerEU initiative (IEA, 2023). This policy aims to streamline the permitting process and remove backlogs, potentially speeding up onshore wind builds.

In Q32022, the German government announced a new onshore wind law known as “The WindLandG”. The law aims to expand onshore wind capacity by 12GW annually until 2025 and 10GW annually thereafter (Wind Europe, 2023). This policy forms part of the upgraded Easter Package in the EEG2023 scheme and includes a mandate to achieve an 80% share of renewables in Germany’s electricity mix by 2030, and a completely climate-neutral energy system by 2045 (Die Bundesregierung, 2022). The law also simplifies permitting procedures to enable faster project approvals.

The Onshore Wind Power Act is a complementary policy that aims to remove obstacles such as land availability and local opposition. It does so by mandating that 2% of German state sites be reserved for onshore wind generation and by involving local communities through financial participation and approvals. German states that are unwilling or unable to comply with the law can exchange up to 50% of their designated sites with overachieving states by 2032 (Clean Energy Wire, 2023). This breakthrough has boosted Germany’s onshore wind sector, which has been constrained in recent years by issues such as land availability, project approvals, local opposition, and surging raw material prices.

The government is using a strategically curated auction route to allocate projects and attract investor interest. In 2023 alone, the government aims to auction 12.8GW of onshore wind. However, the results of the first auction round held in February 2023 showed that out of 3.2GW of offered tenders, only 1.4GW were awarded, indicating an undersubscribed auction (Wind Europe, 2023). To make the auction more competitive and attract more bids, the German authorities have increased the price ceiling by 90% to EUR 113/MWh (IEA, 2023).

With the Feed-in-Tariffs (FiTs) fading away and auctions gaining popularity for project development, corporate buyers such as StatKraft, Fraport AG and Octopus Energy have shown significant interest in buying energy from the onshore wind energy sector. Some companies are taking the Power Purchase Agreement (PPA) route to enter the energy sector. For instance, in May 2023, Fraport AG announced signing a 5-year PPA with Centrica for a 20MW onshore wind farm in Germany (CENTRICA, 2023). To further facilitate the adoption of merchant wind and PPA, the European Union has urged Germany and its member states to simplify the signing procedure for PPA agreements, which could potentially drive investors’ interest in long-term commitments.

Germany’s heavy reliance on Russian gas imports has accelerated the country’s shift towards alternate energy sources, including renewables. In July 2022, the country approved a fund injection of EUR35.4 billion earmarked for 2023, with a total of EUREUR177.5 billion to expedite this shift (Bloomberg, 2022). In addition, the European Commission approved EUR28 billion in December 2022 under Germany’s renewable support scheme to rapidly expand the use of wind and solar energy (EURO NEWS, 2022). This investment is made under EEG 2023, which offers premiums to renewable energy developers in addition to their market price for selling power, while small developers can benefit from guaranteed electricity prices through FiTs. With the EC’s proposals to allow more “state aid,” Germany aims to strengthen financial support for investments in domestic energy transition supply chains, primarily for wind and solar projects. Such support signals a competitive renewable market.

It is worth noting that variability in renewable energy, grid management, and energy storage remains a crucial area of exploration. Since 2015, Germany’s VRE curtailment has been stabilized, but a lack of interconnection capacity has resulted in production-consumption mismatch and curtailment (IEA, 2023). However, Germany is actively investing in grid connectivity and has already implemented smaller-grid expansions. In May 2023, transmission system operators 50Hertz, Amprion, Tennet, and Transnet unveiled a plan to invest €128.3 billion up to 2045 to integrate more renewables (OIL PRICE, 2023). Similarly, the large-scale energy storage market is expected to double due to rapid expansion targets and “Innovation Tenders” launched for storage plus projects (PV Magazine, 2023). Notably, Copenhagen Infrastructure Partners launched Baldur Power GmbH as its dedicated platform for the development and realization of renewable energy and storage projects in Germany (PV TECH, 2023).

Apart from this, Germany has a significant repowering market, as about 266 MW of wind power was decommissioned in 2022 (Wind Europe, 2023). This presents a clear business opportunity for OEMs to meet the demand for new turbines. Companies such as Nordex Group (Repowering-61.8 MW and 99 MW in 2023) (WIND INSIDER, 2023) and Vestas (Repowering-66 MW in 2022) (VESTAS, 2022) have already secured substantial orders to repower Germany’s wind farms. Further, companies like Qualistas Energy, VSB, and Enova have received approval to repower wind farms in 2023 with capacities of 21 MW, 105 MW, and 87 MW, respectively, providing renewed focus to Germany’s repowering market (Qualistas Energy, 2023) (RENEWS, 2023).