In a historic setback for Germany's offshore wind energy sector, an auction for new wind parks in the North Sea received no bids for the first time ever, signaling growing concerns among developers.

The auction, which included two areas with a potential capacity of 2,500 megawatts, failed to attract any investors, as confirmed by the Bundesverband der Energie- und Wasserwirtschaft (BDEW).

Federal Minister of Economics Katherina Reiche identified geological risks and the reluctance of customers to enter power purchase agreements during periods of negative pricing as key factors contributing to the auction's failure.

Stefan Thimm, managing director of the Federal Association of Offshore Wind Energy (BWO), described the situation as a 'catastrophe,' citing rising costs and market unpredictability as significant deterrents for developers.

To enhance investment security, industry leaders are advocating for the introduction of Contracts-for-Difference, which would guarantee a minimum price for electricity and encourage investment.

Investors are currently grappling with volatile construction costs and fluctuating electricity prices, prompting calls for adjustments to Germany's market-based auction design.

The failure of this auction poses a serious threat to Germany's transition from fossil fuels, as offshore wind energy is essential for achieving the country's renewable energy targets.

The two wind areas that received no bids were expected to begin operations in 2030 and 2031, with plans to re-tender the auction by June 2026.

Concerns about the economic viability of the auctioned areas have been raised, particularly due to expected wind yields being significantly lower than other locations.

Industry experts argue that the current bidding process is ineffective, drawing comparisons to Denmark's similar auction challenges.

Reiche suggested that the risks associated with the auction might have been underestimated and emphasized the need for a review of auction conditions to better attract investors.

The offshore wind sector has long warned about increasing risks and costs, including rising material prices and uncertainties in government policies regarding renewable energy expansion.