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Germany

Germany

In readiness for the wholesale market -- More income than feed-in tariff

Direct marketing of wind generated electricity on the German wholesale power exchange EEX is getting closer as two further wind generation companies co-operate with energy companies to get systems up and running. Germany's current renewable energy law sets fixed minimum prices for wind power and makes no specific provisions for selling it into the market at commercial rates. But energy regulator Bundesnetzagentur (BNA) is expected to agree to trading arrangements for wind power compatible with the current law by the end of this month.

The arrangements will be temporary, pending fuller treatment of the issues in an upcoming amendment to Germany's renewable energy law which sets the conditions for wind's national "feed-in tariff." The new law should take effect at the start of 2009. The period for which wind operators can choose to either gamble on the wholesale market or elect safe, but perhaps less lucrative, payments under the support law has yet to be specified.

The two companies behind the latest move towards the wholesale market are Vattenfall Europe Sales (VES) and Natenco, a subsidiary of French renewables firm Theolia. Their action follows tests on a similar trading initiative earlier this year by WE2, a special purpose unit set up by regional energy company EWE and wind plant developer and operator WPD (Windpower Monthly, May 2007). While WE2 estimates its trading system will see earnings for wind turbine owners rise compared with the feed-in tariff by 1.5% to 4%, VES and Natenco say theirs could see some wind operator earnings increase by at least 10%.

The range in both cases is reflective of the workings of the renewable energy law. As turbines age they no longer qualify for the top level feed-in rate, making the earnings improvement from selling on the wholesale market greater for older wind plant. Germany now has more than 21 GW of installed wind power selling into the network at a price fixed by government, while pushing other generation off the grid.

Market disturbance

"Once you get up to 21 GW of wind you're no longer talking about background noise on the system," says Eberhard Holstein of VES. "The renewables power generated under the rules of the renewable energy act is now a real disturbance to the market," he says. "The renewable energy law gives important security of planning but we want to see development of the renewable energy act moved forward," stresses Frank Finzel of Natenco.

The two companies are working with EWC Weather Consult, whose managing director, Jon Meis, says "forecasting reliability has been improved to the point where wind power can be marketed on the EEX."

Vattenfall will provide its information technology architecture and billing system to handle the wind power trading as a service to Natenco for a fee. Natenco will trade the electricity from wind stations with an output rising to 400 MW by the end of 2007, located at sites scattered across Germany and ranging in age from brand new to ten years old.

More efficient

"It's not just a matter of wind operators being able to swap from a support system to the market and back to take the best from each. Direct marketing is more efficient because it does away with the month-ahead forecast required by the renewable energy law on what wind power will be available, which results in an expensive requirement for balancing power provided by the transmission system operator," says Jochen Twele from Berlin Technical and Economics University, who is advising the partners.

The power station capacity reserved for balancing power can then be returned to the market so power prices should fall, he says. This saving for the consumer is greater than the potentially increased earnings to the wind station operators that may choose to move between the wholesale market and feed-in tariff support system, he observes. "When wind operators bid day-ahead onto the system this reduces uncertainty and at the same time some system responsibility moves across to the wind operator," Twele says.

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