Offshore wind power expansion is faltering because investors fear for their returns in the current tendering process, which lacks feed-in tariffs. This concern is compounded by an immature tendering process, uncertain spatial planning, and growing doubts about contracts for difference. At the same time, offshore wind power expansion suffers from a lack of reliability, even though offshore wind energy is politically considered a key technology. This complex situation is slowing down investments, while project developers and suppliers are postponing decisions. (handelsblatt: 11.12.25)
Offshore Wind Expansion Needs a New Tendering Process
The industry’s criticism is primarily directed at the existing tendering process. Operators must forgo feed-in tariffs and simultaneously make substantial payments to even be considered. This award model significantly increases the economic risk, while banks and investors demand clear calculation bases. Felipe Montero of Iberdrola Germany emphasizes that without reforms, hardly any viable projects will emerge. He warns that supply chains will only remain stable if offshore wind expansion continues uninterrupted.
The failed auction in August highlights the problem. No company submitted a bid, even though land was available. The tendering process relies on competition without a guaranteed electricity price, but this very approach is a deterrent. In a second round, the highest bid is awarded to the state, which effectively amounts to a pre-commitment. This structure unsettles even financially strong players.
Fuel feed-in tariffs are missing as a safety net
Without feed-in tariffs, many projects lack a viable economic foundation. Operators must sell their electricity entirely on the market, despite significant price fluctuations. This lack of a guaranteed electricity price reduces profitability and increases financing costs. While €16.8 billion flowed to the state from auctions between 2023 and 2025, this represents increasing obstacles for offshore wind power expansion. Traditional energy companies are withdrawing, and even large corporations have recently hesitated.
The industry therefore emphasizes that a reliable feed-in tariff or a comparable instrument would facilitate investment. Without this safeguard, the expansion of offshore wind energy remains vulnerable to market turbulence.
The energy transition hinges on offshore expansion
A stagnant expansion of offshore wind power jeopardizes key energy policy goals. The share of renewable energies is to increase to at least 80 percent by 2030, but without additional offshore capacity, this goal remains unattainable. In 2024, the share was only 59 percent. While the German government plans for 30 gigawatts by 2030, only 9.2 gigawatts are currently installed.
This gap demonstrates how heavily the energy transition depends on the expansion of offshore wind power. Any delay directly impacts security of supply and electricity prices, while international competition waits.
Contracts for Difference as a Bridge for Investors
Contracts for Difference are increasingly coming into focus as a potential solution. These so-called CfD contracts guarantee a fixed return by compensating for price fluctuations. If the market price falls below the agreed level, the government compensates for the difference, while higher prices result in repayments. This creates a reliable framework that facilitates investment and reduces risks.
Industry representatives see contracts for difference (CfDs) as a viable basis for new projects. They are also considered an option by the Federal Ministry for Economic Affairs and Energy, but adjustments are still pending. However, every tender round is crucial for the expansion of offshore wind power, because delays are almost impossible to make up for.
Spatial Planning Increases the Pressure
In addition to the tendering process, spatial planning is hindering expansion. Operators criticize the fact that wind farms are planned too densely, resulting in turbines being positioned in each other’s wind shadow. This offshore spatial planning reduces yields and worsens profitability. Stefan Thimm of the German Offshore Wind Energy Association (BWE) is therefore calling for a revision, arguing that efficiency is more important than simply increasing land density.
The Federal Maritime and Hydrographic Agency (BSH) has announced initial adjustments, but many companies expect more comprehensive measures. Without realistic spatial planning, offshore wind power expansion loses its appeal, despite the existing technical potential.
Ultimately, it must be said: Only a reformed tendering process, reliable contracts for difference (CfDs), a sustainable feed-in tariff, and revised spatial planning can stabilize offshore wind power expansion and ensure the long-term advancement of offshore wind energy.