Popularity forces trading premium cuts for 2013

GERMANY: The government has been forced to announce cuts to its "market premium" mechanism for trading wind and other renewables generation after its generous introductory rate proved hugely popular.

Introduced at the beginning of 2012, the "market premium" mechanism has proved enormously popular because it results in better returns than the feed-in tariff system to which it is linked.

In particular, the "management premium" component of the "market premium", designed to cover the costs of trading was fixed at a generous level. By October 2012, about 75% of Germany's 30GW of wind capacity had switched to the system.

But after criticism from the opposition Greens Party and the renewables sector itself, the conservative-liberal federal government agreed a new "management premium" regulation ( Managementpraemieverordnung – MaPrV) on 29th August 2012, which was passed by federal parliament on 18th October.

This reduces the management premium from the beginning of 2013 from the originally planned €0.01/kWh to €0.0065-0.0075/kWh, but is expected to still provide sufficient incentive to stop wind operators from switching back to the classic feed-in tariff system. In 2012, the management premium amounts to €0.012/kWh