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Germany

Germany

TURNING THE BIG GUNS ON RENEWABLES FINANCING

The German electricity utilities association, VDEW, is considering lodging an appeal with the Federal Constitutional Court against the Electricity Feed Law (EFL). The law obliges utilities to buy renewables power at a premium price and forms the basis of the wind market in Germany -- currently the most dynamic in the world. To support its views the VDEW has prepared a report which is not yet available to the public.

Armed with a new expert report, the German electricity utilities association, VDEW, is considering lodging an appeal with the Federal Constitutional Court against the existence of the Electricity Feed Law (EFL). The law obliges utilities to buy renewables power at a premium price, and forms the basis of the wind market in Germany -- currently the most dynamic in the world.

The report, which has yet to become available to the public, has been prepared by VDEW law professor Hans-Wolfgang Arndt. He is now considering if one of VDEW's members should be persuaded to lodge the appeal.

Since it came into force in 1991, the EFL has played a vital role in encouraging the swift expansion of the wind market. However, VDEW managing director Joachim Grawe is bitterly opposed to the EFL and attacks the so-called "waterfall profits" earned by small hydro operators and the "windfall profits" by wind plant operators. VDEW argues that investment in wind turbines is popular among the professional classes, such as dentists and lawyers, as profitable tax write-offs. It says that cashing in on tax advantages and creaming off public money has nothing to do with protecting the environment.

But statistics from the Jülich Research Centre, which administers the 250 MW federal wind programme, do not support this argument. According to its breakdown of the 5358 applications for subsidy received by the beginning of November, farmers accounted for 19.3%, local community councils for 2.9%, tax paying employees for 43.4%, commercial enterprises (including dentists and lawyers) for 33.7%, with the rest, representing associations, co-operatives and similar groups, for 0.7%. Dentists, lawyers and the like, who may be spurred by the lure of tax write-offs, apparently account for just one third of the total.

Grawe also states that in 1993 alone utilities had to pay an additional DEM 149 million to cover the their purchase of renewables electricity at the premium rates laid down in the EFL. This compares with a DEM 100 million energy saving programme run by major utility RWE Energie. Household customers are paid a DEM 100 bonus if they buy a new energy saving refrigerator or freezer, with the cost of the programme being passed on to household electricity consumers with the full approval of the authorities. If a single utility can pass on DEM 100 million to its customers in the name of the environment, without question, it would seem unlikely that VDEW's objections to DEM 149 million, spread mainly across utilities in Bavaria, Schleswig Holstein and Lower Saxony, will be taken seriously.

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