Germany’s transition to an auction-based system for wind is raising questions about a downturn in orders for turbine manufacturers.

At least one specialist analyst group, U.K.-based A Word About Wind, has speculated that wind turbine original equipment manufacturers (OEMs) might face a drought in Germany after community groups won the majority of capacity in the nation’s first two onshore auctions.

“This is a result of the way the system has been designed to offer favorable terms to community-based groups,” said A Word About Wind’s Richard Heap.

The rules do not require these groups to have a development permit in place before they submit it into the auction, unlike other developers, he said.

“These groups are able to win support and then have 54 months, or four-and-a-half years, to secure that permit,” Heap commented. “Many will not need turbines for some time.”

The rules are set to change in 2018, when all bidders will be expected to have a construction permit in place before entering the auction. What happens beyond next year will largely depend on the outcome of the national election due later this month.

That still leaves uncertainty over orders from this year’s auctions. A Word About Wind noted that 96 percent of planned capacity in the first auction, or 65 out of 70 projects, went to community-based groups. In the second auction, the level was 95 percent.

“If community groups are unable to take their ideas for schemes through to completion, then rival developers and turbine makers will be right to ask serious questions about this policy failure,” claimed Adam Barber, A Word About Wind’s managing director.

“We are all for competition, but 96 percent and 95 percent show a system that is one-sided.”

The analysts said it could be a further blow to German turbine sales after the country introduced rules to cap annual onshore installations at 2.8 gigawatts annually, down from a yearly average of 4.2 gigawatts for the past five years.

Not everyone agrees with this dour assessment, though. FTI Consulting, an independent global business advisory firm, has increased its forecast for German onshore wind installations in 2017-2026.

“I think the bidder type for the first two auctions launched in Germany in 2017 is correct, but saying the market size will drop from 4.2 gigawatts to 2.8 gigawatts from this year is wrong,” said Feng Zhao, senior director and head of wind in FTI’s energy team.

This is because projects approved before Jan. 1, 2017, under the Federal Emissions Control Act, and commissioned before 2019 will be exempted from auction rules.

FTI estimates more than 6 gigawatts of capacity falls into this "transitional plant" class, which should bolster OEM order books throughout 2017 and 2018.

Zhao said another source, the Underwriters Laboratories subsidiary DEWI, believed there was more than 8 gigawatts of newly approved feed-in tariff wind capacity by end of 2016.

Either way, Zhao said, “The annual onshore [installations] for 2017 and 2018 shall be higher than the cap.”

One thing is clear: The advent of auctions has ushered in a new era of cost reduction in German wind.

The second auction this year saw bidders pitching in at an average price of €0.04 ($0.05) per kilowatt-hour, down around 25 percent from the €0.0571 average level in Germany’s first onshore auction, in May.

“The result confirms that the wind farms due to be built in the next decade are among the cheapest forms of electricity, rivaling fossil fuels including coal and natural gas,” reported Bloomberg.

The news outlet also noted that “turbine makers including Nordex SE say that auction rules tilted in favor of citizen groups mean that projects may never get built, robbing suppliers of sales.”

Whether community groups will be able to buy turbines is still an open question.