Have you already marked June 9, 2024, in your calendar? On this day, the big will meet the small, the high mass of European democracy will meet the high mass of German garden friends. Not only will their federal association celebrate the Day of the Garden, but the European elections will also be held in Germany on that day. At least the latter was decided by the federal cabinet yesterday.
For this reason, I would like to put three flowers from Europe.Table in your basket: the features of the scramble for list positions in Germany, of the test for the von der Leyen coalition, and of new alliance options. All of them have been harvested from my colleague Markus Grabitz‘s early bed.
By the way, Germany’s allotment gardeners are no less forward-looking: preparations for the 2024 Garden Day have long since begun, they write on their website. And the organizing regional association Saarland in the border triangle is made for this day. So after the ballot, perhaps you’ll relax at the sight of freshly blossomed mallows and daisies before the nerve-wracking election evening begins.
After the Council and the lead ITRE committee officially finalized their positions on the Cyber Resilience Act (CRA) last week, the next law to increase digital resilience and make attacks more difficult is now entering the home stretch. But the first points of contention for the trilogue and with other players are already emerging.
One of the bigger points of contention in the coming months will be the question of the extent to which cloud-based services are covered by the CRA. The Commission draft still stated that “software as a service” should be excluded from the CRA. Recital 9 of the Council agreement, on the other hand, stipulates that the legal act should apply to “data processing solutions in connection with a product with digital elements” if the product’s functionality would not be available without them. The position of the European Parliament’s Committee on Industry, Research and Energy (ITRE) also goes in this direction.
The German Electrical and Digital Manufacturers’ Association (ZVEI) sees some improvements but would still like to see significant changes to the CRA. “The scope of application is still too large and should urgently be reduced to products with an actual relevant risk potential,” says Sarah Bäumchen, a member of the ZVEI management board. Under the Council and ITRE proposals, a large number of new products with digital elements would be covered.
Criticism of the planned product classifications also comes from the consumer side – but from the opposite direction. Consumer associations call for the provision of updates to be defined more broadly than currently envisaged in the ITRE and Council positions. Products should not become unusable or a safety risk because the end of the mandatory minimum support period has been reached – the negotiators would have to make improvements here.
In addition, certain products, such as connected toys, would not only have to be provided with declarations of conformity by manufacturers, as is currently the case. Instead, they should be subject to genuine certification by testing bodies.
ZVEI also wants to see the differences in business models taken more into account: The different consumer and business customer models must also be reflected in the law.
The main problem for the electrical and digital industries, however, is the transition periods. These are “still clearly too short to be able to take the comprehensive measures for implementation,” Bäumchen complains. “At least 48 months are needed for these.” But both Parliament and member states want shorter deadlines.
Another point of contention is the question of the extent to which open-source software is also included in the obligations of the CRA or not. The difficulty here is that open-source software is maintained according to very different models: Almost all companies, including those that develop proprietary software themselves, such as Microsoft, rely partly on widely used and standardized open-source software. Some providers also provide development capacity for open-source software but earn their money from the possible services around this category.
But parts of these digital standards continue to be developed by volunteers or completely non-profit actors. At the beginning of the debate about update and quality assurance obligations, it was already apparent that a clear-cut regulation along the lines of the different actors would be complicated.
In its positioning, the Council has now provided that “commercial activity” should be the relevant criterion for determining whether something should fall under the CRA. The Council position explicitly provides that this may also include the payment of user fees.
But in many cases, this is exactly one model of cross-financing the development: The software is developed and made generally available, but at the same time, services such as hosting managed instances of the software are offered. Representatives of the large free content management systems WordPress, Joomla, Drupal and Typo3 have thus addressed the negotiators in a letter and demanded significant improvements to the planned recital 10.
So there is plenty to discuss after the summer break when Parliament and the Council want to move on to the trilogue as quickly as possible.
In some electricity markets, offshore wind farms are now being built without government subsidies. For this reason, some countries have now allowed “negative bids” in tenders for offshore wind farms. This means that project developers not only forego guaranteed feed-in tariffs – they even put money on top to win the bid.
In Germany (currently ranking third in the global offshore capacity market with around eight GW of installed capacity), four areas in the North Sea and Baltic Sea have recently been awarded in exchange for several billion euros. BP will be allowed to build two farms, each with 2 gigawatts of installed capacity, around 120 kilometers northwest of Helgoland, and will pay just under 6.8 billion euros for them. TotalEnergies was awarded the contract for another wind farm in the same North Sea region and a smaller one in the Baltic Sea for just over 5.8 billion euros. The farms are scheduled to start producing electricity in 2030.
According to the European industry association WindEurope, tenders involving negative bids have been held in two other countries: Denmark and, most recently, Lithuania. Negative bids are now also permitted in the Netherlands.
Negative tender results were reported for the first time in Denmark. After the auction for the Thor offshore wind farm last year, the Danish Ministry of Climate, Energy and Utilities spoke of a “new chapter in the development of Danish wind energy.” For the first time, the wind farm and its onshore connection will be built without state subsidies: RWE, as the successful bidder, will have to pay around 375 million euros to Denmark for the project, which has an installed capacity of one gigawatt.
Lithuania now also accepts negative bids, and has already awarded a project on this basis, as WindEurope reports. Recently, a consortium was awarded a contract with a bid of 20 million euros for the construction of a wind farm with 700 megawatts. The bids in Germany show entirely new dimensions: BP and TotalEnergies are spending 12.6 billion euros for their seven gigawatts in Germany – over 60 times the Lithuanian amount in terms of output.
Offshore wind is such a lucrative business model that companies are willing to pay a substantial amount for licenses. However, this is currently only successful in selected markets, as the regulatory conditions vary internationally. In the world’s largest market, China (current offshore wind capacity: around 30 GW), companies submit bids for government incentives based on a coal power price index, as explained by consulting agency Trivium China. The awarded bids are priced below the cost of coal power.
In Europe’s largest market, the UK (currently 14 GW), Vattenfall recently halted its 1.4-gigawatt Norfolk Boreas project, as the company announced at the presentation of its half-year figures. Construction costs had increased so much that the investor now considers the previously granted fixed remuneration of 37.35 pounds (about 43 euros) per megawatt hour insufficient. However, a comparison with Europe is hardly sensible because China’s electricity markets are nowhere near as developed.
In Germany, the concept of “negative bids” now made its debut. The reason: It had simply become unavoidable. In the past, those who offered their electricity at the best conditions were awarded the bid. In the meantime, however, bids at 0 cents have almost become the rule – meaning that most companies have long since foregone guaranteed compensation. In order to decide between the zero-cent bids, the Offshore Wind Energy Act introduced a second round of auctions under the title “dynamic bidding procedure.” In this round, the contract is awarded to the bidder who adds the most money on top after his first zero-cent bid.
The billions the state earns this way are earmarked for a specific purpose. 90 percent of the money is used to reduce the offshore grid levy, which is used to finance the connections to offshore wind farms. Consumers pay it via their electricity bills. Ten percent of the revenue also goes into the federal budget and half must be used “for marine nature conservation measures” and half “for environmentally friendly fisheries measures, including fisheries restructuring measures.”
The fact that only “two financially and equity-strong giants from the oil and gas sector” successfully bid in the German tender drew criticism from the German Offshore Wind Energy Foundation. The two companies plan to install nearly the total capacity that currently exists in German waters. An additional 8 to 9 gigawatts are to be tendered next year. If the auction design is not revised by then, there is a “risk of an oligopoly on the German offshore wind market,” the foundation complains. Politics must be careful to “preserve the diversity of players.”
Criticism has also come from WindEurope. Although the temptation to introduce a tender design with negative bids is obvious, as subsidies are no longer needed and even generate revenue for the state budget. “At first glance, this seems favorable, but unfortunately, it is a misconception,” says spokesman Christoph Zipf. Because project developers would have to pass on those costs. That would either drive up electricity prices or investors would have to “pass the costs on to the value chain.” This is done “at the expense of manufacturers and suppliers who are already in the red or have very low margins.”
The fact that the topic is now boiling up just after the German tender is simply because the money paid in the German offshore areas is unusually generous. If the billions are applied to the expected electricity yields, the assumed lifetime of the turbines is 20 years, resulting in a value of around two cents per kilowatt-hour.
The companies are also speculating on a long-term electricity market price level that will allow them to sell their power profitably despite the high premiums. Recently, the conditions in this regard have been favorable: The monthly average market values for offshore wind power in 2023 have ranged between around eight and eleven cents per kilowatt-hour.
However, the market values fluctuate significantly, which is now a risk for investors. The market was very attractive for electricity producers in 2022, as they could achieve an average of 18.3 cents per kilowatt-hour for offshore wind power at the exchange. In 2021, it had also been a solid nine cents, but in the pandemic year 2020, the market value of offshore wind power was a ruinous 2.7 cents.
Companies that invest in an offshore wind farm without a minimum state remuneration and with a hefty payment to the state need to have one thing above all else: Confidence in continued high market prices on the energy exchange.
The current news about forest fires in Europe can give the impression that half the continent is burning. However, in terms of the area burned, the 2023 fires were less devastating than the average of the past ten years. The 2023 cumulative burned area curve is actually quite close to the minimum value measured since 2012. In terms of the number of fires, 2023 is also below average. Through July 22, there have been 16,407 fires in Europe. This is the lowest figure since 2012.
However, if we only look at Greece, for example, 2023 is well above the average for 2006 to 2022. In Germany, 2023 is also above the average of 429 hectares burned so far, with 900 hectares.
It is indisputable that man-made climate change is responsible for the extreme heat that has strongly favored forest fires in Europe as well as parts of Africa, America and Asia. The record June and July temperatures in southern Europe “would have been virtually impossible” without human carbon emissions, writes World Weather Attribution, an academic body that studies the attribution of extreme weather events. According to the paper, recent heat waves around the world would have been significantly cooler without climate change. Heat waves in southern Europe were 2.5 °C warmer than they would have been without human-induced climate change, the WWA attests. luk
As much as we appreciate your attention: On warm summer days, you might want to read something other than features and news about the EU. That is why you will find book tips from our editorial team here from time to time in the coming weeks. This time, editor Sarah Schäfer takes us on a journey: to the Russian border, to Spain in times of civil war and even to Panama.
Caroline Moorehead: Martha Gellhorn. A Life
In my suitcase goes the biography of US war reporter Martha Gellhorn. Her career began with the Spanish Civil War and ended with the US invasion of Panama in 1989 – by then, she was in her 80s. Because she could not get official clearance, she smuggled herself onto a hospital ship to be present at the Allied landings at Normandy. Her marriage to Hemingway is one of the less interesting episodes in the life of this impressive woman.
Erika Fatland: The Border
Challenging journeys are the trademark of this writer and social anthropologist. This one takes her along the Russian border, from North Korea to her native Norway and across the Arctic Ocean. She talks to fans and critics of Russia, to reindeer herders and day tourists, to people who still suffer from the consequences of Stalinist terror. And with Ukrainians who resist Russia’s aggression. The book is from 2019, but still topical. It helps to understand how the largest country in the world shapes its neighboring countries to this day.
Have you already marked June 9, 2024, in your calendar? On this day, the big will meet the small, the high mass of European democracy will meet the high mass of German garden friends. Not only will their federal association celebrate the Day of the Garden, but the European elections will also be held in Germany on that day. At least the latter was decided by the federal cabinet yesterday.
For this reason, I would like to put three flowers from Europe.Table in your basket: the features of the scramble for list positions in Germany, of the test for the von der Leyen coalition, and of new alliance options. All of them have been harvested from my colleague Markus Grabitz‘s early bed.
By the way, Germany’s allotment gardeners are no less forward-looking: preparations for the 2024 Garden Day have long since begun, they write on their website. And the organizing regional association Saarland in the border triangle is made for this day. So after the ballot, perhaps you’ll relax at the sight of freshly blossomed mallows and daisies before the nerve-wracking election evening begins.
After the Council and the lead ITRE committee officially finalized their positions on the Cyber Resilience Act (CRA) last week, the next law to increase digital resilience and make attacks more difficult is now entering the home stretch. But the first points of contention for the trilogue and with other players are already emerging.
One of the bigger points of contention in the coming months will be the question of the extent to which cloud-based services are covered by the CRA. The Commission draft still stated that “software as a service” should be excluded from the CRA. Recital 9 of the Council agreement, on the other hand, stipulates that the legal act should apply to “data processing solutions in connection with a product with digital elements” if the product’s functionality would not be available without them. The position of the European Parliament’s Committee on Industry, Research and Energy (ITRE) also goes in this direction.
The German Electrical and Digital Manufacturers’ Association (ZVEI) sees some improvements but would still like to see significant changes to the CRA. “The scope of application is still too large and should urgently be reduced to products with an actual relevant risk potential,” says Sarah Bäumchen, a member of the ZVEI management board. Under the Council and ITRE proposals, a large number of new products with digital elements would be covered.
Criticism of the planned product classifications also comes from the consumer side – but from the opposite direction. Consumer associations call for the provision of updates to be defined more broadly than currently envisaged in the ITRE and Council positions. Products should not become unusable or a safety risk because the end of the mandatory minimum support period has been reached – the negotiators would have to make improvements here.
In addition, certain products, such as connected toys, would not only have to be provided with declarations of conformity by manufacturers, as is currently the case. Instead, they should be subject to genuine certification by testing bodies.
ZVEI also wants to see the differences in business models taken more into account: The different consumer and business customer models must also be reflected in the law.
The main problem for the electrical and digital industries, however, is the transition periods. These are “still clearly too short to be able to take the comprehensive measures for implementation,” Bäumchen complains. “At least 48 months are needed for these.” But both Parliament and member states want shorter deadlines.
Another point of contention is the question of the extent to which open-source software is also included in the obligations of the CRA or not. The difficulty here is that open-source software is maintained according to very different models: Almost all companies, including those that develop proprietary software themselves, such as Microsoft, rely partly on widely used and standardized open-source software. Some providers also provide development capacity for open-source software but earn their money from the possible services around this category.
But parts of these digital standards continue to be developed by volunteers or completely non-profit actors. At the beginning of the debate about update and quality assurance obligations, it was already apparent that a clear-cut regulation along the lines of the different actors would be complicated.
In its positioning, the Council has now provided that “commercial activity” should be the relevant criterion for determining whether something should fall under the CRA. The Council position explicitly provides that this may also include the payment of user fees.
But in many cases, this is exactly one model of cross-financing the development: The software is developed and made generally available, but at the same time, services such as hosting managed instances of the software are offered. Representatives of the large free content management systems WordPress, Joomla, Drupal and Typo3 have thus addressed the negotiators in a letter and demanded significant improvements to the planned recital 10.
So there is plenty to discuss after the summer break when Parliament and the Council want to move on to the trilogue as quickly as possible.
In some electricity markets, offshore wind farms are now being built without government subsidies. For this reason, some countries have now allowed “negative bids” in tenders for offshore wind farms. This means that project developers not only forego guaranteed feed-in tariffs – they even put money on top to win the bid.
In Germany (currently ranking third in the global offshore capacity market with around eight GW of installed capacity), four areas in the North Sea and Baltic Sea have recently been awarded in exchange for several billion euros. BP will be allowed to build two farms, each with 2 gigawatts of installed capacity, around 120 kilometers northwest of Helgoland, and will pay just under 6.8 billion euros for them. TotalEnergies was awarded the contract for another wind farm in the same North Sea region and a smaller one in the Baltic Sea for just over 5.8 billion euros. The farms are scheduled to start producing electricity in 2030.
According to the European industry association WindEurope, tenders involving negative bids have been held in two other countries: Denmark and, most recently, Lithuania. Negative bids are now also permitted in the Netherlands.
Negative tender results were reported for the first time in Denmark. After the auction for the Thor offshore wind farm last year, the Danish Ministry of Climate, Energy and Utilities spoke of a “new chapter in the development of Danish wind energy.” For the first time, the wind farm and its onshore connection will be built without state subsidies: RWE, as the successful bidder, will have to pay around 375 million euros to Denmark for the project, which has an installed capacity of one gigawatt.
Lithuania now also accepts negative bids, and has already awarded a project on this basis, as WindEurope reports. Recently, a consortium was awarded a contract with a bid of 20 million euros for the construction of a wind farm with 700 megawatts. The bids in Germany show entirely new dimensions: BP and TotalEnergies are spending 12.6 billion euros for their seven gigawatts in Germany – over 60 times the Lithuanian amount in terms of output.
Offshore wind is such a lucrative business model that companies are willing to pay a substantial amount for licenses. However, this is currently only successful in selected markets, as the regulatory conditions vary internationally. In the world’s largest market, China (current offshore wind capacity: around 30 GW), companies submit bids for government incentives based on a coal power price index, as explained by consulting agency Trivium China. The awarded bids are priced below the cost of coal power.
In Europe’s largest market, the UK (currently 14 GW), Vattenfall recently halted its 1.4-gigawatt Norfolk Boreas project, as the company announced at the presentation of its half-year figures. Construction costs had increased so much that the investor now considers the previously granted fixed remuneration of 37.35 pounds (about 43 euros) per megawatt hour insufficient. However, a comparison with Europe is hardly sensible because China’s electricity markets are nowhere near as developed.
In Germany, the concept of “negative bids” now made its debut. The reason: It had simply become unavoidable. In the past, those who offered their electricity at the best conditions were awarded the bid. In the meantime, however, bids at 0 cents have almost become the rule – meaning that most companies have long since foregone guaranteed compensation. In order to decide between the zero-cent bids, the Offshore Wind Energy Act introduced a second round of auctions under the title “dynamic bidding procedure.” In this round, the contract is awarded to the bidder who adds the most money on top after his first zero-cent bid.
The billions the state earns this way are earmarked for a specific purpose. 90 percent of the money is used to reduce the offshore grid levy, which is used to finance the connections to offshore wind farms. Consumers pay it via their electricity bills. Ten percent of the revenue also goes into the federal budget and half must be used “for marine nature conservation measures” and half “for environmentally friendly fisheries measures, including fisheries restructuring measures.”
The fact that only “two financially and equity-strong giants from the oil and gas sector” successfully bid in the German tender drew criticism from the German Offshore Wind Energy Foundation. The two companies plan to install nearly the total capacity that currently exists in German waters. An additional 8 to 9 gigawatts are to be tendered next year. If the auction design is not revised by then, there is a “risk of an oligopoly on the German offshore wind market,” the foundation complains. Politics must be careful to “preserve the diversity of players.”
Criticism has also come from WindEurope. Although the temptation to introduce a tender design with negative bids is obvious, as subsidies are no longer needed and even generate revenue for the state budget. “At first glance, this seems favorable, but unfortunately, it is a misconception,” says spokesman Christoph Zipf. Because project developers would have to pass on those costs. That would either drive up electricity prices or investors would have to “pass the costs on to the value chain.” This is done “at the expense of manufacturers and suppliers who are already in the red or have very low margins.”
The fact that the topic is now boiling up just after the German tender is simply because the money paid in the German offshore areas is unusually generous. If the billions are applied to the expected electricity yields, the assumed lifetime of the turbines is 20 years, resulting in a value of around two cents per kilowatt-hour.
The companies are also speculating on a long-term electricity market price level that will allow them to sell their power profitably despite the high premiums. Recently, the conditions in this regard have been favorable: The monthly average market values for offshore wind power in 2023 have ranged between around eight and eleven cents per kilowatt-hour.
However, the market values fluctuate significantly, which is now a risk for investors. The market was very attractive for electricity producers in 2022, as they could achieve an average of 18.3 cents per kilowatt-hour for offshore wind power at the exchange. In 2021, it had also been a solid nine cents, but in the pandemic year 2020, the market value of offshore wind power was a ruinous 2.7 cents.
Companies that invest in an offshore wind farm without a minimum state remuneration and with a hefty payment to the state need to have one thing above all else: Confidence in continued high market prices on the energy exchange.
The current news about forest fires in Europe can give the impression that half the continent is burning. However, in terms of the area burned, the 2023 fires were less devastating than the average of the past ten years. The 2023 cumulative burned area curve is actually quite close to the minimum value measured since 2012. In terms of the number of fires, 2023 is also below average. Through July 22, there have been 16,407 fires in Europe. This is the lowest figure since 2012.
However, if we only look at Greece, for example, 2023 is well above the average for 2006 to 2022. In Germany, 2023 is also above the average of 429 hectares burned so far, with 900 hectares.
It is indisputable that man-made climate change is responsible for the extreme heat that has strongly favored forest fires in Europe as well as parts of Africa, America and Asia. The record June and July temperatures in southern Europe “would have been virtually impossible” without human carbon emissions, writes World Weather Attribution, an academic body that studies the attribution of extreme weather events. According to the paper, recent heat waves around the world would have been significantly cooler without climate change. Heat waves in southern Europe were 2.5 °C warmer than they would have been without human-induced climate change, the WWA attests. luk
As much as we appreciate your attention: On warm summer days, you might want to read something other than features and news about the EU. That is why you will find book tips from our editorial team here from time to time in the coming weeks. This time, editor Sarah Schäfer takes us on a journey: to the Russian border, to Spain in times of civil war and even to Panama.
Caroline Moorehead: Martha Gellhorn. A Life
In my suitcase goes the biography of US war reporter Martha Gellhorn. Her career began with the Spanish Civil War and ended with the US invasion of Panama in 1989 – by then, she was in her 80s. Because she could not get official clearance, she smuggled herself onto a hospital ship to be present at the Allied landings at Normandy. Her marriage to Hemingway is one of the less interesting episodes in the life of this impressive woman.
Erika Fatland: The Border
Challenging journeys are the trademark of this writer and social anthropologist. This one takes her along the Russian border, from North Korea to her native Norway and across the Arctic Ocean. She talks to fans and critics of Russia, to reindeer herders and day tourists, to people who still suffer from the consequences of Stalinist terror. And with Ukrainians who resist Russia’s aggression. The book is from 2019, but still topical. It helps to understand how the largest country in the world shapes its neighboring countries to this day.
