Berlin Blocks €800 Million Wind Refund

Three years ago, TotalEnergies and BP turned up at German offshore wind auctions with a bet that looked, at the time, like a turning point. They offered €12.6 billion for sites in the North Sea and Baltic without looking for subsidies. Politicians took the win: proof, apparently, that offshore wind had grown up and could pay its own way.

By May 2026, that confidence has gone. TotalEnergies has paid about €800 million in deposits and guarantees and now wants Berlin to take the sites back. BP, through its Jera Nex BP joint venture, is pushing in the same direction. Both companies say the projects no longer stack up financially. Berlin is refusing, arguing that the law does not allow awarded concessions to be handed back, with the first penalty deadline due in autumn 2027.

How the sums broke

Between 2019 and 2023, northern European governments persuaded themselves that offshore wind had moved beyond state support. The Netherlands awarded Hollandse Kust Zuid at zero subsidy. Germany went further, using "negative bidding", where companies paid the state for the right to build. The €12.6 billion raised in Germany was the high-water mark of that thinking. It lasted about three years.

Then the interest rate cycle turned. The ECB, the European Central Bank that sets rates for the eurozone, raised its key rate from 0% to 4% between July 2022 and September 2023. Offshore wind is brutally exposed to that shift. Most of the money is spent upfront on turbines, foundations and undersea cables, while the income arrives gradually over 25 years.

When borrowing was cheap, the margin could be thin but workable. With financing costs several points higher, the same project can lose money for its whole life. Construction and component costs rose 30-50% from 2021 levels, while the cost of financing European projects rose by 3-4 percentage points, according to KPMG/OFATE. A bid that looked just about viable on 2021 assumptions could be wiped out entirely.

The grid has become a second constraint. In Germany, lead times for offshore transmission components now run to six years. In the Netherlands, 60% of TenneT’s expansion projects are running an average 2.5 years late. A wind farm without a grid connection is a stranded asset: expensive to hold, incapable of earning. At the same time, the energy majors are steering capital back towards oil and gas projects with faster returns, making the offshore wind commitments look worse inside their own accounts.

Who pays for the retreat

German electricity consumers are first in line. Berlin had set aside 90% of the auction proceeds to cap grid fees and power prices, easing bills for households still carrying the shock of the 2022 energy crisis. If TotalEnergies succeeds in getting its money back, more than €7 billion disappears from that fund.

The deeper cost is time. Citing a Fraunhofer study they commissioned, the companies want Germany’s 70 GW offshore target pushed back by 16 years, from 2041 to 2057. The same failure is visible elsewhere. The Netherlands will miss its 21 GW target for 2031. Denmark’s December 2024 auction received no qualifying bids. Britain’s Allocation Round 5 in 2023 drew no offshore wind bids at all.

Governments are now moving back towards the same answer: Contracts for Difference, or CfDs. Under these schemes, the state guarantees a minimum electricity price over 20 years. If the market price falls below that level, the government pays the difference. Germany is redesigning its auctions around CfDs for 2027. Denmark has secured €5 billion in EU-approved state aid for a new CfD scheme. Britain raised its guaranteed price after the 2023 failure and later saw 8.4 GW awarded in Allocation Round 7.

The industry’s own lobby group has now called negative bidding "dead". State support has returned after a short experiment in pretending it was no longer needed. The unresolved question is the same one subsidy-free offshore wind was meant to answer: how much public money should go to private energy companies, on what terms, and whether the years spent searching for a cheaper model can still be recovered.