Final court ruling on German system

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The European Court of Justice (ECJ) has ruled that Germany's fixed tariff for electricity generated from renewable sources of energy, introduced in the 1990 renewable energy feed-in law, is not a subsidy because utility premium payments for renewables power are not sourced directly or indirectly from the state budget. The ruling follows a legal opinion already published (Windpower Monthly, December 2000) and had been expected. The court warns, however, that the German renewable energy law could contravene Europe's internal market rules because it can hinder cross-border trade between EU member countries.

At the moment, however, electricity is not labelled according to where and how it is generated, ruling out the possibility of such trade, the court points out. But it draws attention to the European Commission's view that mutually recognised certificates of origin are essential if trading of renewables is to be "reliable and practical."

The Luxembourg decision strengthens Germany's current renewables law, the Erneuerbare-Energie-Gesetz (EEG), which replaced the old law in April 2000, says Dörte Fouquet, legal expert of German wind association BWE. She stresses that the EEG restricts the minimum payments to a period of 20 years and varies the rate according to plant performance at different sites and allows for adjustment to them. As such, she claims, it does not set a fixed tariff.

In its reaction to the judgement, the electricity federation Verband der Elektrizitaetswirtschaft (VDEW) highlights the cost of Germany's support for all renewable energies. "The state imposed support mechanism cost about DEM 2 billion in 2000 and the trend is upwards," it says. Since the law was introduced in 1991 it has cost Germany DEM 5 billion, says VDEW, for 45 TWh of renewable electricity. The price, DEM 0.11/kWh, is too high," says VDEW's Eckhard Schulz.

The DEM 5 billion paid to renewables corresponds to about 60% of the subsidy paid to Germany's coal industry each year and about 7% of the tax-free nuclear reserves held by German nuclear power station operators for spent nuclear fuel disposal and plant decommissioning.

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