Germany's first offshore wind lease auction ended with a price tag of EUR 12.6bn for four sites totaling 7 GW – but how expensive was it actually?

This summer’s German lease price of EUR 12.6bn – equivalent to EUR 1.8bn per MW – seems steep compared to the US' New York Bight lease auction last year (EUR 0.7bn per MW) or the UK Leasing Round 4 two years ago (estimated at EUR 0.8bn per MW).

In this comparison, Germany looks like the most expensive market for offshore wind leases in the world. However, these values completely ignore important differences in payment timing as well as other elements. The different payment schemes are key to understanding the present value of the lease prices to arrive at comparable prices and assess how expensive Germany’s auction actually was for the winning developers.

When the differences in payment timing are factored in, German lease prices turn out to be on par with the UK and the US. Aegir Insights’ new Lease Price Benchmarking shows prices ranging from 0.70 mEUR/MW to 0.75 mEUR/MW across the three markets.

In nominal values terms, the German lease prices per MW are more than twice the levels of the recent lease auctions for fixed-bottom sites in the UK and US. However, the postponed payment timing in Germany and the ever-important time value of money reduce the prices to less than UK and US levels.

So, the German prices are not as expensive as they first appear.  

Aegir Insights Market Insights

Aegir Insights has just published a Market Insights report to our subscribing clients, benchmarking the lease prices from the auction in Germany.

Aegir Market Insights are short, stand-alone intelligence pieces diving into significant events in the offshore wind market, giving you more context around and understanding of critical market developments.

Want to learn more about the first offshore lease auction in Germany and Aegir Insights' offshore wind market intelligence? Please reach out to us here.