BWO tells Berlin its two-stage CfD model falls short of what the offshore wind market needs

Germany's offshore wind trade association has told the federal government that its draft reform of the Wind Energy at Sea Act (WindSeeG) does not go far enough, arguing that the proposed two-stage auction mechanism treats contracts for difference as a fallback rather than a structural feature of every tender.^[1]

The Federal Ministry for Economic Affairs and Energy (BMWE) published the draft amendment on 10 August 2026, opening a stakeholder consultation that closed at 10am on 17 August.^[1] The German Offshore Wind Energy Association (BWO) submitted its response within that window.

What the draft proposes

The draft retains Germany's statutory target of at least 70 GW of offshore wind capacity by 2045 and sets an annual auction corridor of 2,000 MW to 4,800 MW from 2027, replacing the previously fixed 4,000 MW annual target. It also proposes extending the standard operating period for new offshore wind farms from 25 to 35 years, and introduces provisions for cross-border offshore wind projects.

The auction mechanism works in two stages:

• Stage one tests whether any bidder will develop a site without revenue support. Where multiple bidders are willing, a dynamic ascending auction determines a payment component - 90% of which flows to the connecting transmission system operator as an electricity cost reduction, with 5% each allocated to marine conservation and fisheries.
• Stage two is triggered only if no bidder accepts the opening price in stage one - at which point a descending auction for the lowest applicable CfD strike value becomes available.

The draft also confirms that no offshore wind auction will take place in 2026, following converter platform delays at sites N-10.1 and N-10.2 and the government's earlier decision to suspend that round.

Where BWO draws the line

The BWO welcomed the inclusion of two-sided CfDs in principle, but said the proposed sequencing is the wrong design. The association's core objection is that CfD protection should be reliably available from the outset of every tender, not activated only when no developer is prepared to take on full merchant risk.

"With the CfD, the draft takes an important step in the right direction," said BWO managing director Stefan Thimm, "but it is crucial that it is used from the outset, rather than kicking in only when no one is willing to bear the full market risk."

The association argued that the two-stage structure effectively rewards developers willing to accept the greatest risk, rather than making risks manageable across the board. BWO said CfDs can give investors long-term planning certainty and make an important contribution to restoring lost confidence in the German market.

BWO also criticised the draft for omitting a mechanism that would allow developers to voluntarily return sites awarded in the 2023-2025 tender rounds that are no longer economically viable. The association has argued since May 2026 that without such a route, unviable projects could remain tied up for years, blocking grid connection capacity and offshore areas that could otherwise be re-tendered quickly.

The backdrop: a market that has already failed once

The urgency of BWO's position is grounded in recent history. A 2.5 GW tender for North Sea sites N-10.1 and N-10.2 attracted no bids in August 2025 - the first complete failure of a German offshore wind auction - prompting the government to postpone the re-tender to 2027. Earlier 2025 rounds, while technically successful, saw a declining number of bids and falling bid values.

The failed tender exposed the structural weaknesses of Germany's existing model: uncapped negative bidding, grid connection delays, and potential losses from wake effects in the densely packed German North Sea. CfDs are already used in several major European offshore markets, including the UK, France, Belgium, and Poland. BWO has noted that almost all Baltic Sea countries have either introduced bilateral CfDs or are in the process of doing so, and warned that a divergent German design would complicate cross-border cooperation and drive up project costs.

What to watch

The consultation has now closed. The next test is whether the BMWE revises the two-stage mechanism before the draft proceeds through the Bundestag - and whether the re-tender of N-10.1 and N-10.2, planned for 2027, will be governed by the new rules or the old ones. BWO has made clear it will continue pressing for a CfD-only model as the legislative process moves forward.