Germany could be facing a gigawatt-scale “decommissioning wave” in its onshore wind sector.

Writing earlier this month for the German-language magazine Top Agrar, Hinrich Neumann reported that many of Germany’s 28,000 onshore wind turbines could be decommissioned beginning in 2020.

Under Germany’s Renewable Energy Act (EEG), which took effect in 2000, renewable energy sources, including onshore wind turbines, secured priority grid access and guaranteed above-market payment for each kilowatt-hour delivered to the grid. These feed-in tariff (FIT) payments lasted for 20 years.

In 2020, the first of those feed-in tariff contracts expire. The Institute for Integrated Production Hannover (IPH), a nonprofit industrial engineering company, estimates that 2.4 gigawatts of installed onshore wind capacity will lose eligibility for guaranteed payments each year. In 2020, up to 4,500 turbines could come down because they will have been rendered uneconomical without the guaranteed payments, IPH project engineer Martin Westbomke told Neumann.

Asked about the chances Germany will see gigawatt-scale onshore wind capacity go offline after 2020 and not be replaced, Andrea Scassola, Europe wind market analyst at MAKE Consulting, said they're “high, given the ownership structure, which is typically very fragmented across a broad range of individuals (farmers, cooperatives, etc.).”

Citizen ownership of renewable energy projects is one of the pillars of Germany’s energy transition, or Energiewende, with households and farms accounting for more than 40 percent of renewables investment.

The pivot to auctions, caps on onshore wind expansion

Amendments to Germany’s Renewable Energy Act adopted in the summer of 2014 shifted government support for renewable energy from fixed feed-in tariffs to payments determined by competitive auctions. Successful bidders receive payments based on their winning bids for 20 years. 2019 marks the first year in which only onshore wind installations that have submitted winning auction bids receive government support.

The amended law also capped annual onshore wind additions at 2.8 gigawatts through 2019 and 2.9 gigawatts in 2020. The levels of the post-2020 annual caps could determine whether there is a contraction in Germany’s installed onshore wind capacity.  

Owners of existing projects whose feed-in tariffs expire, beginning in 2020, could explore repowering the sites with new, more powerful turbines. The repowered projects would have to submit successful bids in response to the government’s onshore wind tenders.

“Some professional developers are engaging in acquisition of old wind farms to repower them under the auction scheme,” said MAKE Consulting’s Scassola.

“This could become particularly useful given the permitting constraints and the decline in projects that can qualify for a permit," she added.

But according to Clean Energy Wire (CLEW), a Berlin-based nonprofit news service focused on Germany’s energy transition, the German Wind Energy Association (BWE) has criticized the design of the annual onshore wind expansion cap because it does not distinguish between new-build projects and wind turbines erected for repowering projects that are replacing existing turbines. So, the 2.9-gigawatt cap in 2020, for instance, represents a gross, not net, addition of onshore wind capacity to the grid.

According to research from the energy consultancy enervis cited by CLEW, repowering projects are expected to make up a growing share of winning bids in Germany’s onshore wind auctions through 2023. Under such a scenario, there could be a net decrease in installed onshore wind capacity.

In a press statement, Matthias Zelinger, CEO of the German Engineering Federation’s Power Systems division, called on the federal government to “examine and adapt” the onshore wind expansion caps to prevent a shrinking onshore wind sector.

This week, BWE, along with the Offshore Wind Energy Foundation and Metalworkers’ Union, issued a joint appeal urging the government to “implement without delay” so-called “special auctions” for 4 gigawatts of onshore wind capacity as agreed to in the coalition treaty for the new national government.

Earlier this month, Germany’s grid regulator, the Federal Network Agency, announced results of the second onshore wind auction of 2018. For the first time, an offshore wind auction was undersubscribed.