Germany's first offshore wind lease auction ended on par with record-setting UK and US lease prices – but how attractive are the German sites in comparison?

Germany's lease auction prices are quite competitive when compared to the UK and US in present value terms that factor in varying payment timing, and assessed in the context of key differences in market conditions:

• Transmission scope
  The scopes differ across the three countries, and costs in Germany are significantly lower, as the TSO is building the export cable and onshore substation.
  
• Wind resources
  The German and UK sites have very attractive wind speeds around 10 m/s, while the US sites in the New York Bight have lower, yet still attractive, wind speeds closer to 9.3 m/s. Thereby, 1 GW projects in German and UK produce more electricity than a US project of the same size.
  
• Route to market
  Subsidy options and routes to market differ across the three markets. In Germany, there are no subsidies for the lease auction winners. The UK holds annual CfD auctions, and the US states of New York and New Jersey hold PPA auctions – however, these subsidy schemes have proven not to necessarily provide secure routes to market. UK’s latest auction failed to award CfDs to any offshore wind projects when the results were announced last week, and several developers in the US have paid termination fees to get out of PPA deals due to increased project costs.

In conclusion, Germany's first lease auction reached prices on par with UK’s fourth lease auction and US’s New York for attractive sites with great wind speeds and limited transmission scope.

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