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Germany

Germany

Consumers may have to pay for cable delays

GERMANY: Germany's electricity consumers might have to shoulder the costs if transmission system operators (TSOs) fail to complete offshore cable connections in time to coincide with the commissioning of the wind farms they serve. The proposal was made in a draft law released by the German cabinet in late August.

Current delays in offshore cable construction are alone expected to result in damage claims of about EUR1 billion, with the TSO charged with developing the German North Sea offshore grid, Tennet, under fire.

The 295MW Nordsee Ost is one of several German wind projects at risk of delay due to slow progress in offshore cable installation.

Controversial

The federal government's draft law has provoked controversy because even in cases of negligence a TSO would pay no more than 20% of any ensuing damages. Most of the costs would be rolled over to consumers, in the form of a EUR0.0025/kWh levy, which could add up to EUR8.74 a year to the energy bill of an average four-person household.

Industrial consumers, many already enjoying reduced renewable levy rates, are given special treatment in that they will pay reduced offshore risk levy rates.

The decision to make electricity consumers liable for the majority of the costs resulting from cable delays and failures is necessary, says the government, because it will assist the country in achieving its 2030 offshore wind capacity target of 25GW. The new rules will also contribute to Germany's security of electricity supply, the draft law states. Critics of the policy argue that it represents yet another levy on consumer electricity prices.

The draft law is expected to take effect before the end of this year.

Under the government's plan, offshore operators would face some losses if they experience cable delays and/or failures. These would include receiving only 90% compensation for lost feed-in tariff payments, with compensation payable from the 11th day after a cable is unavailable. Offshore operators would see the periods during which they receive compensation for cable unavailability subtracted from the 20 years for which their projects receive feed-in tariff payments.

TSOs will be required to reduce the potential burden on consumers by taking out insurance on "economically insurable risks". TSOs also need to draw up a binding offshore network development plan, which will set a date for completion and the location of new offshore cables to shore. Offshore developers can alter construction schedules up to 30 months before completion of the cable they plan to use.

These rules will replace an existing system under which unconditional and untransferable pledges for cable connection are granted to individual offshore projects.

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