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Germany

Germany

Wind support escapes direct government control

GERMANY: Parliament retains a say on feed-in-tariff rates for wind, but lower rates for solar may deter investment in offshore projects.

The German government has backed off from giving itself unchecked power to reduce the amount of electricity eligible for support under the Renewable-Energy Act. Bowing to widespread criticism, it amended the draft law on 9 March, just before its first parliamentary reading. The government now plans to limit its decision-making power to six months from when the law takes effect and to solar energy alone. Parliament will continue to have the final say on wind and other renewables.

The German wind energy association, Bundesverband Windenergie (BWE), had been horrified by the conservative/liberal coalition government's plans to remove parliamentary scrutiny from decisions on the percentage of wind and other renewables generation eligible for support.

Without the staying hand of parliament, significant changes to support could be introduced at relatively short notice. "This would eliminate the security of investment provided by the Renewable Energy Act, which is one of the mainstays of (the act's) success," warned BWE president Hermann Albers in February. "Investment in renewables could sharply reduce or stop altogether," he added.

Likely effects for wind

While this danger has now been minimised, the new law, which was due to take effect on 1 April, still has the potential to negatively affect wind energy. Sharply reduced feed-in tariff rates for solar power might threaten offshore wind in particular. Solar energy, which has so far been the main target of the critics of state support, may now win favour by appearing to be cheaper and less risky than wind generation at sea.

Offshore wind currently receives EUR0.19/kWh, payable for 12 years or longer depending on distance from shore and water depth, in an arrangement running until at least the end of 2017. The lowest solar support - for 1-10MW rooftop panels - is already well below that. And by 2016, at EUR0.0675/kWh, it will drop below the support for onshore wind. Under current arrangements, onshore wind will be receiving a standard rate of EUR0.0841/kWh in 2016, or EUR0.0888/kWh if the project is eligible for the repowering bonus. The most expensive type of solar support will be cheaper than offshore wind from August 2012, then rise to EUR0.189/kWh and drop to just EUR0.1275/kWh in 2016. Solar support is payable for 20 years.

On a positive note, the new law exempts the electricity fed to storage facilities from the renewable-energy levy. This will encourage the construction of more electricity storage, which could play a big role in smoothing out the fluctuations in wind and solar generation to help create a reliable and controllable power supply.

The exemption also applies to the electricity that is used to run the storage facility and on power used in the production of so-called storage gas fed into the natural gas network and later taken out for electricity generation to feed into the electricity network.

Both these exemptions could benefit wind-to-gas systems that use surplus wind energy to drive an electrolysis system for the production of hydrogen, which, in turn, is turned into methane gas of a quality virtually identical to natural gas. This gas can be used to generate electricity when the wind is not blowing and the sun is not shining.

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