As Germany moves away from feed-in tariffs and toward competitive auctions for renewables, the country's first tenders are bringing positive results.
On Friday, the German network agency awarded contracts to 70 wind farms worth 807 megawatts under the country's first auction for onshore projects. The average bid price came in at €0.057 ($0.06) per kilowatt-hour.
"The first auction for onshore wind installations was successful. The pleasingly high level of competition made it possible to accept an average bid of 5.71 cents," said Jochen Homann, the president of Germany's federal network agency, in a statement announcing the bids.
Community projects -- wind farms owned directly by citizens -- made up 93 percent of the winning bids.
Germany has long promoted a citizen-centric approach to renewable energy development. Feed-in tariffs were seen as the best tool for empowering individuals to invest in wind, solar and biogas. But in order to control costs and target renewables development in specific areas, Germany moved to an auction system this year.
The latest onshore wind tender shows that community ownership can still take precedence under the new system -- while also encouraging lower costs.
"Feed-in tariffs were an expressed desire to pay more for renewable power. Now it's getting to a point where the technology is competitive, and that's a big milestone for markets like Germany and Spain," said Matthew DaPrato, GTM Research's director of product strategy.
Spain's transition to auctions is also bringing tangible results. Last week, the country awarded nearly 3 gigawatts of wind projects under a competitive bidding process, with the average price coming in at €0.043 ($0.048) per kilowatt-hour.
It was the first major procurement of wind in Spain since retroactive changes to feed-in tariffs were implemented four years ago.
"Competitive auctions have reinvigorated some of these European markets and allowed them to capitalize on their earlier investments at a more competitive price," said DaPrato.
Germany's onshore wind auction follows a record-breaking offshore auction in April. Four projects worth 1,490 megawatts of capacity were awarded contracts in the North Sea. The average bid was €0.044 ($0.05) per kilowatt-hour.
"This shows the auction has unlocked medium- and long-term cost reduction potential, which will lead to a reduction in funding to an extent that had not been expected," said Homann in a statement.
Countries around the world are moving decisively toward competitive auctions, while phasing out expensive feed-in tariff programs. Auctions in Latin America, India and the Middle East have brought some of the lowest-priced solar ever seen -- with some solar PV projects approaching 2 cents per kilowatt-hour.