Liberalisation law puts cap on wind output

As part of new legislation to liberalise the German electricity and gas markets a cap has been placed on the volume of renewable energy eligible for premium payments. In area's where wind power reaches 5% of the electricity supply mix, utilities will no longer be obliged to buy the output. The cap was introduced as one of several amendments to the law governing the wind industry's all important Renewable Energy Feed in Tariff (REFIT). The amendments were included as an integral part of liberalisation legislation, approved by the parliamentary economics committee on November 12.

According to the draft liberalisation law, the new legislation places a 5% cap on renewable energy "at each level of power supply" through the utility hierarchy -- from the local utility through to the supra-regional power company. "According to information from Preussenelektra, its 5% limit will be reached in 2000, which means the REFIT obligations will not apply for new renewables power plant installed from 2001," states a footnote to the bill, now wending its way through the political process before becoming law.

Germany's wind association, the Bundesverband Windenergie (BWE), has reacted sharply to the cap, describing it as "a massive contradiction in the government's climate policy." Its views are backed by Heinrich Bartelt of the Bundesverband Erneuerbare Energie (BEE), the country's campaign group for renewable energy. By putting renewables into a "5% ghetto" the government stands no hope of reaching its target to reduce C02 emissions by 25% by 2005 compared with 1990 levels, he says.

Germany's utility sector has fought a fierce rearguard action against the REFIT law since it was introduced in 1991, claiming that power companies in windy areas were unfairly carrying the entire burden of paying for renewable energy development in Germany.

Possible reprieves

The battle, however, is far from over, says the renewables lobby. It feels there is some light on the horizon. First, the bill has to become law -- and that is by no means a foregone conclusion. Attempts have been made to draft the law in such a way that it sidesteps the need for approval by the upper house of parliament, the Bundesrat. This attempt to dodge democracy has been challenged by the Social Democrat Party, which has a majority of seats in the Bundesrat. If its appeal is successful, the bill could get no further than the upper house. Ironically, the concept of a cap on wind was first mooted in the Bundesrat by a Social Democrat, the Schleswag-Holstein energy minister, Claus Møller. In the days up to the November 12 meeting he was busy retracting his proposal.

The second spark of light is contained in the draft legislation which states that the REFIT law will in all probability be reviewed by 2000 at the latest -- before wind output reaches the 5% ceiling. Third, the BWE's Ralf Bischof points out that the cap may well not comply with the European Union's Directive on an Internal Energy Market, to come into force from February 1999. In a liberalised market there will be no "hierarchy of supply," thus the basis for the limit will be obsolete before 2000, he says.

Some positives

The draft law is not all bad news for wind. The liberalisation legislation upholds the obligation on utilities to comply with the REFIT, even though the monopoly supply areas on which it was based will be abolished. In a liberalised market the obligation will fall on all "utilities that operate a grid for the public supply." Furthermore, by implication the REFIT is now applicable to offshore wind energy, clearing up a major area of dispute between the wind and utility sectors.

Furthermore, utilities are granted the right to pass on the additional costs of clean power to the consumer by including them in the grid transmission charge, which is a standard part of all billing for electricity. If acted upon, however, this clause would make electricity more expensive in windy areas with high concentrations of wind plant -- the backbone of utility arguments against the REFIT.

A further amendment calling for a government framework in which utilities can make voluntary pledges on promoting development of renewables and combined heat and power plant was met with a puzzled response from Bischof. "It isn't clear why this had to be included in the law and we can't really take it seriously," he says. All the utilities need to do is stop blocking the way for development of renewables, he says.

The amendment has a sting in the tail for the utility sector, however. After due time for consultation, the legislation makes room for the government to set targets for renewables -- to be fulfilled within a given time period and with a stipulation for two yearly progress reports to parliament.