Berlin Blocks €800 Million Wind Refund

Three years ago, TotalEnergies and BP bid €12.6 billion for offshore wind sites in the German North Sea and Baltic, without asking for subsidies. Politicians treated it as proof that renewable energy could now stand on its own feet. By May 2026, both companies want out. The model that was meant to replace state support has cracked across four countries.

TotalEnergies has paid roughly €800 million in deposits and guarantees and wants Berlin to take the sites back. BP, through its joint venture Jera Nex BP, is pressing in the same direction. Both say the projects no longer work financially. Berlin’s answer is that the law does not allow awarded concessions to be returned, with the first penalty deadline due in autumn 2027.

How the maths broke

Between 2019 and 2023, northern European governments persuaded themselves that offshore wind no longer needed public support. The Netherlands awarded Hollandse Kust Zuid at zero subsidy. Germany went further with "negative bidding", a system where companies pay the state for the right to build. The €12.6 billion German auction was the high point of that confidence. It lasted about three years.

The ECB, the European Central Bank that sets eurozone interest rates, raised its key rate from 0% to 4% between July 2022 and September 2023. Malta knows that shift through mortgages, business loans and government borrowing. Offshore wind feels it even harder, because almost all the money is spent at the start on turbines, foundations and undersea cables, while revenue comes in slowly over 25 years.

When money was cheap, these projects could still make a narrow return. With financing costs several percentage points higher, many lose money across their lifetime. Construction and component costs rose 30-50% from 2021 levels, and the cost of financing European projects climbed 3-4 percentage points (KPMG/OFATE). A project built on 2021 assumptions can see its profit margin disappear.

The grid did not keep pace either. In Germany, lead times for offshore transmission components now stretch to six years. In the Netherlands, 60% of TenneT’s expansion projects run an average 2.5 years behind schedule. A wind farm without a grid connection is an expensive stranded asset. Meanwhile, the energy majors are putting capital back into faster-returning oil and gas, making these wind commitments look worse on their balance sheets.

Who pays for the retreat

German electricity consumers are first in line. The government had earmarked 90% of the auction revenues to cap grid fees and power prices, cushioning households still carrying the cost of the 2022 energy crisis. If TotalEnergies wins its refund demand, more than €7 billion disappears from that pot.

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

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

The industry’s own lobby group has declared negative bidding "dead". State support is back after a short experiment in doing without it. For a country like Malta, where energy policy quickly becomes a household bill, the lesson is blunt: the green transition still needs public money, and the real argument is who receives it, on what terms, and how much time has been lost chasing a cheaper answer.