Federal Network Agency launches Germany’s first cross-border PV auction with Denmark

The Federal Network Agency announced the first mutually opened auction for ground-mounted photovoltaic installations in cooperation with Denmark.

Thereby, for the first time, photovoltaic installations in Denmark can participate in a German auction alongside photovoltaic installations from Germany.

Rainer Baake, State Secretary in the Federal Ministry for Economic Affairs and Energy, said: “With this first cross-border auction in Europe, we are sending an important signal and underline that Germany is ready to work closely together with its European neighbours on promoting renewable energy. “We want to fully evaluate the experience gained in this process with Denmark, and to draw on it in future plans for cooperation with other European partner countries.”

Peter Franke, Vize-President of the Federal Network Agency, added: “Since the national auctions have already proved a success, I am confident that the cross-border auctions will prove to be the same.”

The basis for this cross-border auction are the cooperation agreement signed in July this year between Germany and Denmark on the mutual opening up of auctions for ground-mounted photovoltaic installations and the Cross-border Renewable Energy Ordinance. Denmark is planning an auction for ground-mounted photovoltaic installations this year in which bids from sites in Germany can also participate

Bids for photovoltaic installations located in Denmark or Germany can be submitted in the auction announced today. The winning bids will be determined by the level of the bid, irrespectively of the location of the installation. The payments to the installations in both Denmark and Germany will be based on the German Renewable Energy Sources Act, the Cross-border Renewable Energy Ordinance and the provisions of the cooperation agreement.

The cooperation strengthens the regional cooperation on energy between Denmark and Germany, and fulfils a requirement imposed by the European Commission. The key point is that the cooperation must be mutually beneficial and have a genuine impact on the energy transition in both countries. For this reason, the agreement is based on the principle of reciprocity and requires that the electricity be physically imported into the other country.

Further information on the auction

Investors have until 23 November 2016 to submit bids for this auction to the Federal Network Agency. The bids relate to the amount of funding per kilowatt-hour (the “value to be applied”) for an installation. The maximum installation size for this auction round is 10 MW, the maximum bid is 11.09 cents per kilowatt-hour, and the size of the auction is 50 MW. The Federal Network Agency has produced specific formal rules for this auction.

This auction is being organised in addition to the next scheduled national auction round, for which bids of photovoltaic installations in Germany can be submitted up to 1 December 2016. So the timing of the two auctions will partially overlap. Bidders can submit bids for both auctions. If they win funding in the 23 November round, they will still have time to withdraw bids already submitted for the national auction in December, or they can wait for the results of the cross-border auction before bidding for the later round. The possibility to bid in both auctions increases the level of competition in both rounds.

While the national auctions currently use the “pay-as-bid” procedure to establish the price levels, which means that every successful bid is awarded a contract based on the price specified in that bid, this auction adopts the “uniform pricing procedure”. Under this, the last successful bid to be accepted sets the price for all successful bids. This price mechanism was tested last year in the national auctions.