Germany – To provide medium-sized industrial businesses in Germany with access to green electricity produced by offshore wind farms, RWE and Commerzbank intend to establish a “Green Mittelstand Fund”.
The new fund will provide these businesses with the chance to secure green electricity for the first time through long-term power purchase agreements (PPAs). Large industrial clients have historically had the ability to sign such long-term power purchase agreements with significant green electricity projects. As part of this fund, medium-sized businesses have two options: On the one hand, they are able to invest directly in the envisioned offshore wind farm. On the other hand, they can achieve their decarbonization goals by using a PPA to secure long-term green electricity. You can combine either choice.
Around one gigawatt of installed capacity is expected from the proposed wind farm (GW). In accordance with the proposed amendment to the German Wind Energy at Sea Act, the companies wish to submit an application for a seabed for the wind farm within the framework of future tenders. In 2023, these auctions are anticipated to take place. RWE intends to own 51% of the wind farm’s shares, with Commerzbank offering the remaining 49% to interested medium-sized businesses through the “Green Mittelstand Fund.” The wind farm will be designed, constructed, and run by RWE.
The business will promise to make the power produced there accessible to medium-sized businesses. From the German “Mittelstand,” Commerzbank intends to provide green electricity to its clients directly. On the one hand, this will happen through customized financing and credit options for medium-sized businesses’ equity investments in the offshore wind farm. On the other hand, the idea provides the opportunity to buy green electricity from the wind farm through PPAs, starting with a tranche equivalent to a capacity of 5 megawatts – tailored to the electricity needs of medium-sized businesses.
True transformation
To be climate neutral by 2045, Germany will require enormous amounts of green electricity. In order to advance offshore wind’s seabed to at least 70 GW by 2045, expansion targets must be raised under the German Wind Energy at Sea Act amendment. Speed and a clear focus on assisting the economy in shifting to climate-friendly production are required to take advantage of industrial policy-related opportunities and make Germany a leading location for investment in renewable energies. To achieve this, the majority of the clean energy generated by offshore wind power must be used by industry and the German “Mittelstand” (medium-sized businesses).
Designing the bidding conditions for offshore wind turbines on so-called non-pre-surveyed areas without the negative bidding component, as the current draft law does, is one requirement for this. German businesses, which already pay record-high energy prices, would be forced to pay more for green electricity as a result of this bid component. Additionally, the criteria for the award procedure need to be improved. They should be picked with the overarching objective of providing green electricity in a clever and system-serving manner in mind, while also allowing differentiation between the bids.
