EU should make it easier to invest in grid expansion

Private funds needed for offshore wind, says German minister

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The large-scale investments required to ensure that Europe's electricity networks can handle power from offshore wind farms mean that the EU should revise rules governing the financing of energy infrastructure, argued German economy and technology minister, Philipp Rösler, in Berlin yesterday.

Private sector investment in grid projects needs to be made easier, according to Rösler. Instead of considering the re-nationalising of grids in order to ensure they are modernised quickly enough, EU rules should be designed to encourage private sector investment, said Rösler, who acknowledged that he has raised the issue with EU finance chief, Michel Barnier.

Rösler is chair of Germany's centre-right Free Democratic Party, which has supported cuts in financial support for renewable energy generation.

The minister's vision for financing electricity grid upgrades focuses on the creation of a "special risk classification for investments in energy infrastructure". This would allow private investors, such as insurers, to fund grid expansion and upgrades without having to tie up as much of their capital as they are currently required to under existing rules.

Such a change could be incorporated into the EU's Solvency II programme, an ongoing review of the rules governing capital adequacy for the European insurance sector, suggests Rösler.

Germany's electricity network urgently requires expansion and strengthening in order to accommodate much higher volumes of power generated by variable renewable sources. The country's ambitious offshore wind programme will not succeed without high levels of investment in its onshore electricity transmission network. As Windpower Offshore reported earlier this month, Germany's installed offshore wind capacity could exceed 1GW by the end of the year.

New German legislation designed to remove obstacles standing in the way of the construction of export cables linking German offshore wind farms to shore has been a success, thus far, with Mitsubishi confirming this month it will invest just over €575m in four such projects.

* Meanwhile, the need to "mobilise private finance" in order to accelerate a global, low-carbon economic transition is emphasised in a report published this week by Davos-based World Economic Forum. Annual investment in "fossil-fuel intensive infrastructure" remains higher than clean-tech investment and is "increasing annually," note the authors, from management consultancy, Accenture. They call for a re-evaluation of investment priorities and incentives in order to ensure that funding is directed toward projects that contribute to efforts to avoid dangerous climate change. See Green Investment Report: The ways and means to unlock private investment for green growth.

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