Visit windpowermonthlyevents.com for the latest on our upcoming conferences and webcasts

Germany

Germany

PAYING THE PRICE OF THE WIND

The three electricity utilities in northern Germany most affected by the rapid expansion of wind energy in the country are again complaining about the financial burden of having to buy clean power at the premium price specified by the Electricity Feed Law (EFL). Suggestions that the additional cost be spread across the whole country have not yet been heard by the German politicians. In spite of the moaning about the prices for wind energy, the utility shareholders are still being paid healthy dividends.

The three electric utilities in northern Germany most affected by the rapid expansion of wind energy in the country are again complaining about the financial burden of having to buy clean power at the premium price specified by the Electricity Feed Law (EFL). To drive its message home, EWE of Oldenburg has even hiked its domestic electricity prices by 5% from the beginning of the year to cover the extra cost of wind power.

Yet EWE is not the utility hardest hit, according to the claims of the three. Schleswag of Rendsburg says wind cost it an additional DEM 35 million in 1994, while EWE puts its wind costs at DEM 17 million. Überlandwerk Nord-Hannover of Bremen says its extra burden was DEM 4.5 million. EWE also adjusted its price for households and agricultural and small commercial customers, making the final increase to households 6.6%. "The press has generated quite a whirlwind out of this development, " says Karl Hackstette of EWE. "But from our half a million customers we have had just seven letters of complaint. In addition the newspapers have printed some 20 letters from dissatisfied electricity consumers." These mainly took the utility to task over why more has to be paid for wind generated electricity when cheaper power is available elsewhere. The authors also wanted to know why industrial customers have not been required to pay their share of the increase.

The Interessenverband Windkraft Binnenland (IWB), an association based in Osnabrück which represents the interests of inland wind turbine operators, has also sharply criticised EWE for charging only household customers higher prices, leaving industrial customers untouched. "By introducing a one-sided price increase, EWE is deliberately endangering the broad acceptance of wind power among ordinary people, " says IWB.

Hackstette stresses that EWE supports the use of wind energy and operates its own wind turbines. However, from the start it has called for the additional costs to be spread across the country rather than concentrated on just a few utilities in windy regions. This idea of a "wind pfennig," similar to Germany's kohlepfennig levy on all customers to support German coal production, has been discussed for some time. However, it recently lost credibility when the kohlepfennig was declared unconstitutional. Not only that, the German utilities association, VDEW, has also mounted a campaign casting doubts on whether the EFL is constitutional.

Hackstette further says that EWE is unwilling to start negotiating price increases with industrial customers when Germany already has considerably higher electricity prices than its near neighbours, Holland and France. There are fears that German industry will be made uncompetitive. Following the 6.6% increase on domestic consumers, EWE says a household using 4000 kWh a year will have to pay an additional DEM 6.70 a month, including the kohlepfennig (in Lower Saxony set at 9%) and sales tax of 15%.

Even so, EWE prices are still some of the lowest in Germany. In the most recent comparison of 50 utility prices to industry by the energy consumer organisation, VEA, EWE had the second cheapest prices, Schleswag came in at 16 on the list and Überlandwerk Nord-Hannover (UENH) at 21.

Making up the difference

EWE's increase on its electricity prices, valid for two years, will cover the difference between the price it pays for wind energy under the EFL (DEM 0.1693/kWh in 1994 and DEM 0.1728/kWh in 1995) and the price it would have had to pay for electricity bought in from outside. In practice this means from Preussenelektra, the major supplier in the region.

The cost of wind energy to EWE has indeed risen rapidly as dozens of wind turbines have gone up in its region, from DEM 5.1 million in 1993 to DEM 17 million in 1994 when 118 MW of wind was feeding into the EWE grid. In 1995 the cost is expected to approach DEM 33 million, with an anticipated total wind capacity of 200 MW by the end of the year. But it must be remembered that DEM 17 million in 1994 represented only 1% of the utility's sales that year.

Hackstette says: "The upward trend in our costs will inevitably continue unless some alternative source of funds for clean wind electricity is found." The political aim of Lower Saxony, taken seriously by EWE, says Hackstette, is to have 1300 MW of wind power installed by about 2005, of which 800 MW will be sited in EWE's supply area. Based on prices today, the additional cost of taking this wind generated electricity onto the EWE grid will amount to DEM 130 million.

Unlike EWE, Schleswag and UENH are not planning price increases yet. Schleswag, which takes the largest amount of wind electricity on to its grid, does not anticipate hiking its prices because of wind until 1996. Its additional wind related costs are expected to rise to DEM 50 million in 1995 from DEM 35 million last year. Utility chairman, Karl-Heinrich Buhse, says his company has so far been able to digest these costs internally by offsetting them against the savings achieved through a massive rationalisation programme. However, with its room for manoeuvre shrinking and additional costs due to wind energy rising, Schleswag does not rule out an increase in electricity prices next year. This could only be prevented if a political decision was made to spread the extra costs of renewables-produced electricity across the whole country.

UENH is increasingly vocal about it's wind burden -- expected to double this year from last year's level of DEM 4.5 million, representing 0.54% of 1994 sales and 1% of expected sales in 1995. UENH, too, says it will have to consider price increases from 1996 unless the costs are spread more widely. At the same time, though, UENH reports payment of a generous "standard dividend" of 18% to its owners in 1994 -- Preussenelektra (33%) and Elektrizitätsverband Stade (67%).

Have you registered with us yet?

Register now to enjoy more articles
and free email bulletins.

Sign up now
Already registered?
Sign in

Before commenting please read our rules for commenting on articles.

If you see a comment you find offensive, you can flag it as inappropriate. In the top right-hand corner of an individual comment, you will see 'flag as inappropriate'. Clicking this prompts us to review the comment. For further information see our rules for commenting on articles.

comments powered by Disqus

Windpower Monthly Events

Latest Jobs