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Germany

Germany

The refit explained

Germany's "Electricity Feed Law" obliges utilities to buy power from renewable energy sources at a fixed "renewable energy feed-in tariff (REFIT). It sailed into being on a wave of all party support in parliament at the start of 1991. In April this year the law, largely unchanged and filling no more than a single sheet of paper, was included as an integral part of Germany's broad energy industry act for liberalising the entire energy sector.

For the first few years of its independent life, the Electricity Feed Law went relatively unnoticed. But by 1994 the enormous expansion of wind energy had begun to unnerve the utilities, especially Preussenelektra in the windy north, where most development has taken place. The utility sector embarked on a course of opposition to the REFIT which has ranged from a denigrating newspaper advertisement to attempts to sue the government for being unconstitutional. The non stop barrage has shaken but not stopped the wind market's growth and political support for it has been maintained.

The REFIT for wind and solar generated power in any one year is fixed at a rate of at least 90% of the average price of power charged to industrial and household consumers two years previously. Other renewable energies have lower rates. The law as passed in 1990 contained a "hardship" clause which said that if a utility in a particular region was hard hit economically by the obligation to buy all power from renewable sources in its area, it could request the next utility in the chain of supply to shoulder some of the responsibility.

Minor changes were made to the REFIT law during its merger with the energy industry legislation. Biomass was included, the obligation to take up renewables power was placed on the grid operators rather than the utilities, and the hardship clause was made more specific. In effect this tightening of the clause has placed a cap on renewables, preventing them from supplying more than 10% of Germany's electricity.

The so-called hardship clause now allows a regional or municipal grid operator to relinquish its responsibility for buying renewable power at the REFIT rate once this makes up 5% of the distributor's total supply. Electricity generated over and above the limit must be bought by the next grid operator up the chain of supply, though again a 5% cap applies. Beyond that the utility can pay what it likes for renewables. A review of the hardship clause has been promised by government before the 10% ceiling is reached, or in 1999 at the latest. North German regional utility Schleswag is the first to use the hardship clause and has passed on responsibility for some of the REFIT payments in its distribution area to Preussenelektra. In an appeal to a Kiel court, Preussenelektra is disputing its obligation.

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