Germany - Concern over renewables levy controversies

GERMANY: Germany's wind sector is facing turbulence in 2013 with political infighting ahead of federal elections and a legal battle over whether the renewable energy act is still in line with state aid rules.

Political problems: Standing in the way of development (photo:Southgeist)
Political problems: Standing in the way of development (photo:Southgeist)

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In January, federal environment minister Peter Altmaier caused uproar when he proposed stopping feed-in tariff (FIT) payments to renewables operators for a number of months if the renewables levy account goes into the red. The sector fears that this could bring a halt to investment or result in investing banks demanding additional risk premiums which would raise costs.

Altmaier's main concern is to prevent a potential dramatic future increase in the renewable energy levy, which at EUR 0.053/kWh in 2013 accounts for over 18% of the average household electricity price. He wants to see his proposals come into effect on 1 August 2013. But as the renewables sector points out, the parliamentary upper house, the Bundesrat, dominated by the Social Democrat and Green parties, can block any changes until after the federal elections in September.

Although Altmaier's intentions could trigger a rush on wind energy installations as project developers try to beat any potential unfavourable rule changes, wind energy projects both onshore and especially offshore have long lead times and are difficult to speed up. They are therefore unlikely to result in changes to the previously planned installations in 2013.

Levy investigation

Another significant issue facing the industry is a possible European Commission (EC) investigation into relief from renewable-levy payments offered to Germany's industrial sector, which may in turn lead to a deeper examination of the German renewables support mechanism. The EC was expected to open an investigation in February. In a worst-case scenario, wind-farm owners could even be forced to pay back FIT payments they have already received, legal firm Becker Buttner Held has warned.

Despite these issues, wind turbine installations in 2013 are expected to be high due to a surge in interest in the implementation of the country's strategy to switch energy away from nuclear and fossil-fuel energy towards renewables, known as the Energiewende.

Around 2.7-2.9GW of wind could be installed onshore and 0.7GW offshore in 2013, according to wind energy association BWE. Such a performance would mean 23-44% more capacity would be installed this year than in 2012.

Germany capacity pieLast year, the pace of wind expansion sped up. Some 2.4GW was installed, growth amounting to 20% more than the 2GW says in 2011. Onshore wind accounted for the lion's share with 2.19GW. The total wind fleet reached 31.05GW by the end of the year.

New installation activities in 2012 were strongest in windy northern Germany, with the states of Lower Saxony, Schleswig-Holstein and Mecklenburg-Vorpommern accounting for 15%, 14% and 13% respectively. However, Rhineland-Palatinate in southern Germany took fourth place, reflecting growing interest in wind energy use in inland Germany.

Generation struggles

Despite the new capacity says, 2012 was not an especially windy year in Germany and electricity generation actually fell to 45TWh from 48.9TWh in 2011, according to statistics organisation AG Energiebilanzen. Wind generation amounted to just 7.3% of electricity generation of 617TWh in 2012 compared with a higher 8% of the lower total generation of 609TWh in 2011.

Also in 2012, wind energy lost its place as the dominant type of renewables energy in Germany in terms of capacity. At the end of 2012, Germany's solar photovoltaic (PV) fleet stood at 32.39GW, just over 1GW more than wind energy. However, actual generation of wind was still higher than PV, due to PV generation only being possible in daylight hours. PV generated 29.5TWh in 2012 compared to 19.3TWh in 2011.

Meanwhile, the German offshore sector's contribution remained very minor last year, with just 80MW commissioned. But work is now under way on six offshore wind farms with a total of 1.7GW, and part of this capacity will come online in 2013.

One development this year that should help offshore wind is a law which took effect on 1 January. It aims to tackle the problem of risk liability for delays to the completion of transmission network connections to the onshore network, or potential failures of those lines. A sign that the law is working was Mitsubishi's decision to co-invest in several North Sea offshore cable projects owned by transmission system operator Tennet.

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