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Germany

Germany

ALL PURPOSE SUBSIDY FORMULA

To stabilise the development pattern of wind energy in Germany a federal as well as regional linear support model has been suggested by Munster University. The support system could operate within flexible parameters and the level of support should depend on the equivalent number of hours operated at full load by a particular turbine. This should be calculated on the basis of the actual annual production figure and installed capacity. The formula is simple and applicable to all Länder as they can each fix their own maximum and minimum payments per kWh.

The need for an adjustment to Germany's federal and regional market stimulation programmes for wind energy -- to match changing market conditions -- has not gone unnoticed by Norbert Allnoch from Munster University. He believes that the capital subsidies offered by the country's Länder distort the market and lead to an undesirable stop-go development pattern at a time when the industry craves a steady yet continuous flow of orders. As a contribution to the market stimulation debate he has developed a relatively simple linear model based on the generally accepted most sensible form of support -- premium payment per kilowatt hour. This model, he suggests, could replace both the Länder support systems and the existing, very simple and undifferentiated, payment systems for renewables under the federal government's Electricity Feed Law. The Länder and federal government would be free to feed in different fixed parameters leading to different levels of support to fit their individual budgets, but nevertheless operating according to the same basic principles.

The level of support should depend on the equivalent number of hours operated at full load by a particular turbine, explains Allnoch. This variable is found by dividing the annual production of the machine by the installed nominal capacity. The aim is that the volume of subsidy would decrease as the number of equivalent full load hours increases, but turbines in high wind areas would still earn more than those in regions of less wind.

The first advantage of the linear support model is its simplicity. The only variable is the figure representing the equivalent of full load hours. This is calculated from the actual annual production figure and installed capacity -- figures immediately available to a utility.

Second, the size of investment in a project is no longer artificially reduced by the support subsidy, as is the case at the moment. The real costs can be clearly seen.

Third, the fixed values in the subsidy formula -- maximum and minimum payments per kWh -- would be set as each Länder saw fit, leaving open the option of adding other factors, such as noise emissions, to the formula. Adjusting the fixed values would also make it possible to steer geographic developments. Wind turbines not erected on prime wind sites could be granted a higher rate of support, making it more attractive to seek sites away from the coast.

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