This is an extract from the latest edition of the report “Offshore Wind: Worldwide Regulatory Framework in Selected Countries, 5th Edition 2024.” by The World Forum Offshore Wind. This extract specifically focuses on Germany and the Netherlands.

Germany

Current state of offshore wind development and projects: Currently, Germany is one of the world’s largest markets in the offshore wind energy sector. Not only has it the world’s third largest installed offshore wind capacity, but it is also home to several key players in the global market. In 2023, wind energy continued to be the prevalent source of electrical power in Germany, followed by brown coal, solar, natural gas, biomass, black coal, hydropower and nuclear power. Public electricity generation from offshore wind farms amounted to about 23.5 TWh and 116.3 TWh from onshore wind farms (and together 139.8 TWh out of a total of 435.8 TWh of public electricity generation). This constitutes an overall increase of 14.1 % compared to the previous year, leading to a share of 32% for wind generated electricity: 5.4 % by offshore wind and 26.7 % by onshore wind. While 38 offshore wind turbine generators (OWTGs) with a nominal capacity of 342 MW were installed in 2022, 2023 experienced a slight decrease in offshore wind power installations with only 27 new OWTGs generating 257 MW coming online. During the first half of 2024, 36 OWTGs with a nominal capacity of 377 MW were installed and started to feed-in into the grid and 25 OWTGs with a capacity of 271 MW have been installed but not yet started to feed-in.

Expected market dynamics until 2030 and beyond: Considering that the development of the first eight GW of offshore wind turbine capacity took more than 13 years from the first offshore wind farm commencing operation in 2009, these expansion plans represent a significant and rapid growth for the German market in the upcoming years. Moreover, the latest draft update of the site development plan expects that 60 GW will be installed by 2037. To realise this potential, in 2022 Germany substantially revised the legislation concerning the tender rounds with which production sites are allocated to developers of offshore wind farms. In 2023, Germany signed the Ostend Declaration of Energy Ministers on the North Seas as Europe’s Green Power Plant in which it, along with Belgium, Denmark, France, Ireland, Luxembourg, Norway, the Netherlands, and the United Kingdom committed itself to a series of energy projects. In total, these nine countries aim to install 300 GW of offshore wind power capacity in the North Sea by 2050.

Regulatory framework 

Federal level: The main federal legal instruments setting the regulatory environment for offshore wind energy are the Offshore Wind Energy Act, the Renewable Energies Act and the Energy Industry Act. The Renewable Energies Act encompasses regulations concerning the overall development of renewable energy of all sources, applicable feed-in tariffs, and market premiums. The Energy Industry Act primarily regulates issues regarding the operation and access to the electricity grids. With respect to offshore wind energy, this act includes rules on the duty of the transmission system operators to construct and operate the grid connection systems for OWTGs and compensations in case of a failure to do so. The administrative authorities competent for the execution of the above-mentioned legal acts are, mainly, the Federal Maritime and Hydrographic Agency which is an authority associated with the Federal Ministry of Digital and Transport and inter alia involved in the special planning and site development.

State level: If installed within the territorial sea, the construction and operation of OWTGs (and other facilities) is subject to a permit issued by the competent state authorities based on the permitting regime of the (general) Federal Immission Control Act, not the Offshore Wind Energy Act.

Scheme in relation to exclusivity to construct, own, and operate a project, as well as to receive feed-in revenues

Exclusivity: Under the German regulatory regime, the successful bidder in the public tender procedure is granted the exclusive right to construct, operate and (potentially) receive subsidies for OWTGs. According to the Offshore Wind Energy Act, the bidder who receives the award for a specific offshore wind development site acquires exclusive right to take part in the procedure for the planning approval or planning permit which are the types of permits required for the construction and operation of OWTGs.

Different tender procedures depending on pre-investigation: The 2023 revision of the Offshore Wind Energy Act has introduced material changes to the tender regime for offshore wind sites. So far, a “central” model applied under which the German federal state was responsible not only for the spatial planning but also for the pre-examination of possible installation sites.

Site Development Plan: In a first step, the Federal Maritime and Hydrographic Agency (BSH) develops a “Site Development Plan” for the EEZ (and if agreed with the states also for the territorial sea) which is the main (spatial) planning instrument in respect of the OWTGs and GCSs. This Site Development Plan determines the zoning regulations mainly with respect to OWTGs and GCSs, including determinations of eligible zones (Gebiete) and particular sites within zones, sequence of participation of sites in the tender procedures; target installation years for the OWTGs in the particular sites or for the relevant GCS, locations of converter platforms etc.

Site pre-investigation: If the site development plan determines that a pre-investigation of a particular site will be conducted, the pre-investigation will be conducted under the responsibility of the relevant authority with the target to (i) assess the suitability of the sites, (ii) assess certain aspects which are independent from the specific project design in order to accelerate.

Tender process 

(i) Sites without pre-investigation: While the first stage of the tender remains unchanged from the process prior to the 2023 revision of the Offshore Wind Energy Act, the reform introduced an auction as a second stage (“dynamic tender procedure”).

(ii) Sites with pre-investigation: Following the 2023 reform of the Offshore Wind Energy Act, the evaluation of bids for centrally pre-investigated sites does not only take into account the monetary bid value in Euro per MW, which reflects the payment to be made by the bidder to the state, but also four additional criteria.

(iii) Delays and effects of delays Bidders are bound by certain project realisation milestones. If delays of the realisation of the project occur, the bidder is subject to penalties payable to the competent transmission system operator (TSO).

(iv) Security Bidders are required to provide security to the Federal Network Agency which secures potential claims of the TSO for penalties.

(v) Bid volume The bid volume (installed capacity) must correspond to volume tendered for the specific site.

Incentives for investments: Considering that pre-investigated sites are no longer eligible for receiving public subsidies, the support scheme of the Renewable Energies Act would apply in principle only applies for OWTGs on sites without pre-investigation.

Timeframe for the realisation of the project: The successful bidder is subject to a project realisation timeline (cf. sec. 81 of the Offshore Wind Energy Act) under which certain milestones up to reaching the OWTG’s technical readiness for operation need to be met.

Public law and regulatory permits

Offtake, remuneration and tariff scheme: Under the Renewable Energies Act, a so-called “direct marketing” concept applies, which means that the produced energy is sold to a third party, unless the electricity is used in the direct vicinity of the OWTG and is not transmitted through the grid. In more practical terms this means that the produced electricity is sold under a power purchase agreement (PPA).

Consequences of a project delay: The consequences of a delayed project completion with regard to the offtake regime in general depend on the respective provisions in the PPA. Usually, a delay of the project or OWTGs would, after elapse of a grace period, entitle the offtake to demand a reasonable adjustment of the price.

Grid and Grid Connection: According to the Offshore Wind Energy Act, acceptance of the bid gives the successful bidder receives the right (i) to get a physical connection of the OWTGs with a particular GCS and (ii) to use the connection capacity, both limited to the amount of capacity accepted with the bid.

Netherlands

Current state of offshore wind development and projects: The Netherlands aims that by 2050 all energy used in the Netherlands comes from sustainable energy sources. In efforts to reach this goal, it is agreed in the Climate Agreement that in 2030 49 TWh (approximately 11 GW) of energy is generated by wind power. In 2022, the Dutch government raised the target for offshore wind capacity from 11 to 21 GW by 2030/2031. In April 2024, the Dutch Minister for Climate and Energy informed that there is a delay and that offshore wind capacity of 21 GW is expected to be reached by 2032. There are currently 10 active wind farm zones in the Dutch North Sea. Once the target of 21 GW is reached, wind energy is expected to provide approximately 75% of total electricity in the Netherlands. It is noted, however, that electricity is around 20% of total energy use whereas around 80% of energy use in the Netherlands is from coal, oil and gas. The Dutch government highly prioritises the development and construction of new offshore wind farms. At the same time, the government also recognises that the North Sea is subject to intensive use, including for fisheries, is one of the busiest international seas in the world and requires ecological recovery and nature conservation. The Netherlands was set to generate 4.5 GW of wind energy in 2023 according to the Climate Agreement in 2013. The actual capacity that was reached in 2023 was however 4.7 GW which was reached in time.

Offshore wind promotion system: The Netherlands Enterprise Agency conducts the offshore wind energy subsidy and permits tenders on behalf of the Dutch State. In tenders with subsidy, the subsidy comes from the subsidy programme Stimulation of Sustainable Energy Production of the State. Production of renewable energy is not always profitable because the cost price of renewable energy may be higher than the market price. SDE++ compensates OWFs for the difference between the cost price and the market price for a fixed number of years.

Public law and regulatory permits: The spatial planning of OWFs in the Netherlands is mainly subject to the OWEA and the Water Act. In the National Water Program 2022-2027, which finds its legal basis in the Water Act, the Minister of Economic Affairs and Climate Policy can appoint designated areas which are deemed suitable for OWFs. A so-called Wind Farm Site Decision can be adopted for the development of an OWF in a designated area. There were indeed site decisions for OWFs IJmuiden Ver Alpha and Beta and there will also be site decisions for OWFs IJmuiden Ver Gamma and Nederwiek I.

Offtake, remuneration and tariff scheme: The development of an OWF involves a lot of costs. The development process takes time and requires many studies, procedures and consultations with local residents and other interested parties. There are construction costs of the OWF, the purchase of the wind turbines, the grid integration, and the costs once the wind farm is up and running. The use of long-term contracts for the purchase or sale of electricity is increasing. A PPA is intended to reduce financial risks by providing for a long-term price agreement with a customer. As there is no legislation on these PPAs, no specific stipulations for the content of such PPAs exist. However, in practice, there is a certain established market practice as to the usual and required contents. Furthermore, the Electricity Act and the Offshore Grid Compensation Decree set out the liability regime applicable to the OWF owner in case of a delay in the completion of the offshore grid or the unavailability of the offshore grid.

Planning and construction of the grid connection system: Based on the Electricity Act, the Dutch government appointed the company TenneT as onshore and offshore transmission system operator. TenneT designs, constructs, and operates the onshore grid connection. TenneT shall enter into a Realisation Agreement and a Connection and Transmission Agreement with the OWFs. In the Realisation Agreement, the terms and conditions governing the realisation of the connection of the OWF to the Offshore Transformation System are laid down.

Access the report here