Daimler and Statkraft Unveil PPA for German Wind Farms After Feed-In Tariff Expiration

Daimler and Statkraft Unveil PPA for German Wind Farms After Feed-In Tariff Expiration

Daimler and Norwegian renewable electricity provider Statkraft announced a deal last month that will extend the life of six community-owned wind farms in Germany.

Daimler says under the deal it will become the first major industrial company to source electricity from German wind farms whose guaranteed payments end after 2020. The six wind farms, which together host 31 turbines with a combined generating capacity of 46 megawatts, were commissioned between 1999 and 2001.

Under Germany’s Renewable Energy Act (EEG), which took effect in April 2000, owners of wind farms and other renewable energy projects could secure 20-year contracts with guaranteed payments for each kilowatt-hour fed to the grid, known as feed-in tariffs. With the first tranche of FITs for renewable energy projects expiring soon, project owners must decide whether to decommission or seek to extend the life of their assets.

As GTM reported in May, the looming expiration of FITs has prompted concerns that Germany faces a potential gigawatt-scale “decommissioning wave” in its onshore wind sector. Corporate power-purchase agreements (PPAs) for wind power, as conceived in the Daimler-Statkraft deal, could be one way to extend the life of the wind farms.

“Expiry of FIT subsidies will trigger large-scale decommissioning, which could erode a part of Germany’s installed base,” wrote Andrea Scassola, a senior market analyst for Wood Mackenzie Power & Renewables, in an email.

He added, “PPAs allow wind farms to remain economically viable and [they are] therefore the ideal marketing model for operators and owners of existing wind farms that no longer receive EEG remuneration.”

“Operation without subsidies is often possible when market-oriented action, targeted marketing and efficient plant operations come together,” Dr. Carsten Poppinga, managing director of Statkraft in Germany, said in a statement.