Throughout last year, lobbyists maintained that the premium prices paid for renewables power were in danger of being drastically reduced. Indeed, goaded by talk of "excessive profits" being raked in by the operators of renewable energy plant, the government has been re-considering the Renewable Energy Feed-In Tariff (REFIT) enshrined in the all important Electricity Feed Law. Months of fraught political discussion climaxed in September when the renewables industry mobilised for a massive demonstration in Bonn.
Against this background, the German success story would be hard to explain were it not for one constant -- the political will of the majority of parliament to maintain and bolster the market foundations for wind energy development. No matter how loudly the utilities have complained about the inequities of the REFIT, no matter how many planning authorities have complained about the difficulties of finding space for wind turbines, no matter how vindictively some sectors have complained about wind energy subsidies, the political will has remained constant and true.
Just under 534 MW of wind power was installed in Germany in 1997 -- the largest volume of new capacity ever brought into operation in one year, not only outstripping 1996 installations by 106 MW, but also beating 1995's record of 489 MW. Total wind power generating capacity in Germany is now 2080 MW and the country has now outstripped the United States as world wind energy leader. Development in the US has stagnated at around 1600 MW.
Despite the impressive installation figures, however, the apparent market boost in 1997 is no more than a market stabilisation, warns Norbert Allnoch of the International Industry Forum for Renewable Energies at Münster university. The installation growth rate was just 18%, which, though better than the contraction of 1996 (Windpower Monthly, February 1997), is a far call from the growth rates of 60-100% in the mid-1990s. He adds that rather than the start of a boom, last year's good result was more a reflection of a perceived "last chance" for wind subsidies. Fears have been widespread that government threats to reduce the premium kilowatt hour payments for wind energy would be put into practice at the the beginning of the year.
According to the BWE's Peter Ahmels, a demand by the federal economy ministry last May for the REFIT to be cut had a "considerable accelerating effect on projects." Investors "did their utmost" to get as much wind plant as possible installed before the end of the year in order to be sure of subsidies, he claims. According to Ahmels, disaster was only averted due to the efforts of the renewables lobby, together with sympathetic members of parliament within the ruling parties. They did battle with several members of government who were behind the economy ministry's plans cuts to the REFIT. "If we hadn't succeeded, there would soon have been only remnants of an industry left, not enough to support a wind lobby organisation. We would have had to shut up shop," is his dramatic claim.
The BWE now believes it has identified another vulnerable flank: the bill to liberalise the German electricity and gas markets includes a clause restricting the amount of renewable energy a utility must buy at REFIT rates to 5% of the total supply mix (Windpower Monthly, December 1997). This effective cap on wind energy is designed to protect regional utilities in windy areas who have to pay premium prices for electricity from renewable sources: once the volume of renewables exceeds 5% of such a utility's sales, it can request help from the supra-regional utility. When that utility's limit is reached, additional renewables power will no longer receive premium payments.
"We consider this development to be extremely counterproductive and want the caps removed," says Ahmels. The load on utilities would be better spread by raising a grid levy to cover the additional costs of renewables power, he says.
Andreas Eichler from the BWE manufacturers' committee comments: "How the government can introduce this cap and at the same time announce a new large solar programme is for me unintelligible." A new three year programme, to be operated by both federal and Länder governments with a DEM 30 million budget, was announced in November to stimulate new photovoltaic cell manufacturing. Supporting the production of renewables plant and simultaneously limiting the scope of the REFIT law "looks self-defeating," he says.
The BWE says that if the rate of electricity consumption stagnates and winds are good, the upper 5% limit could be reached in northern Germany by the end of this year. Wind developers will rush to make sure their turbines are not caught when the jaws of the 5% trap snap shut, predicts the BWE. "Two big utility barrels have already begun to overflow," warns Ahmels. "The regional utility Schleswag already takes wind power equivalent to 11% of its sales, and EWE in Oldenburg, 7%." Both these regional utilities lie in Preussenelektra's grid catchment area, stretching from northerly Schleswig-Holstein southwards into Hesse. Preussenelektra's power sales were 62.1 TWh in 1996, so the second 5% cap will bite when it has to start paying for about 3 TWh of wind power.
Allnoch, however, question the logic of BWE's fears and is sceptical about the lobby group's conclusions. The worst-case scenario painted by BWE will probably not materialise anywhere near as soon as the association would like politicians to believe. If the same number of turbines are installed in 1998 as in 1997, wind generation over the whole of Germany could reach 4.3-4.4 TWh, says Allnoch. He doubts this will be enough to trigger the second 5% cap in Preussenelektra's supply area. Wind development, he points out, is spreading away from the north to inland areas.
This view is supported by the DEWI statistics. In Preussenelektra's area, wind power installations in Schleswig-Holstein have slowed over the last three years, while Lower Saxony is just holding steady, along with Mecklenburg Vorpommern. The rate of development in the inland Länder of North Rhine Westfalia, Rhineland Palatinate, Saxony Anhalt and Thüringia, however, has just begun to surge ahead (see table).
Allnoch's more rational view of the wind market's senstivity to the new bill, compared with that of BWE, is also backed by Thyge Weller from Fair Energy in Munich. He points to the wording of the bill (which has still to be signed into law) which says that the double 5% cap is to be reviewed in 1999 and will in any case be overhauled if there is a danger that premium payments to renewable energy are stopped because the second 5% cap at supra-regional level is overstepped.
Meantime, there is good news on the permitting front, with licences for wind projects once again being granted as a matter of routine. The licensing logjam, which developed after federal building law was amended in June 1996, is steadily being cleared. This is another reason for the good rate of wind installations in 1997, says BWE. The amendment not only grants wind turbines privileged planning status in greenfield areas, but it also gave parishes until the end of 1998 to earmark areas for wind energy development. It is in the interests for all parishes to develop wind power development zones. Without them, wind development has blanket privilege everywhere, explains BWE's Ralf Bischof.
Allnoch, too, notes the steady progress in planning legislation. One of the tasks of his organisation is to provide planning advice to local governments in the inland state of North Rhine Westfalia. "There is a widespread willingness to get through the planning as quickly as possible," he says. Weller agrees that planning is proceeding briskly -- and advises regional planners not to become fixed on wind zones. "There are sites outside wind priority areas with an ideal combination of factors for wind development which should not be ignored," he says. In some areas financing, not planning, is the stumbling block, he adds. In eastern Germany, still recovering after its economic crash following unification with the west, there are licensed wind projects which cannot find investors, he points out.
There is still a cloud on the planning horizon, however. A new landscape protection lobby, the Bundesverband Landschaftschutz (BLS) is determinedly highlighting past planning errors and by drawing attention to wind turbine accidents, raising safety as an issue. "The organisation directs its criticism exclusively and aggressively against wind energy, while lignite open cast mining is described as environmentally friendly," complains the BWE. "In the meantime, we have indication of links between the BLS and the electricity industry," it reports. Weller speculates on whether this suspected connection indicates a utility desire to delegate the job of gnawing away at the wind industry to the BLS. The utility sector, he points out, has its work cut out manoeuvring in a liberalised market.
Despite all the perceived stumbling blocks, even the BWE admits that the outlook for German wind energy is generally good. "If politicians would only leave the original REFIT law alone and take up ambitious initiatives for offshore and export projects, the wind industry will continue to show high rates of growth and employment," says the BWE. "One indicator is that following the installation in 1997 of around 35 wind turbines with rated capacities of 1 MW or more, something like 200 are planned for 1998," says Eichler. And a considerable number of projects using 600 kW to 1 MW turbines are in the pipeline.
To ensure success in the longer term, Allnoch believes the wind industry must move beyond merely defending the REFIT law. "If the industry relies on the state for guaranteed sales and prices and acts as though competition has nothing to do with it, later it could well be bowled over by other realities. We have to anticipate and prepare for the liberalised power market," he stresses. Better ways of expanding exports must be found too, he adds, as Germany still has to catch up with Denmark. He advocates creating a more positive image of wind power in Germany, not only to encourage citizens to see all its advantages but also to boost industry morale at home and abroad.
Weller, too, says the wind lobby must look further ahead. He would like to see a "green power pool" developing within the future liberalised power market. Renewable plant operators need to move now, he says, to obtain the best business conditions. In the light of the UN's climate change conference in Kyoto, Weller also thinks the wind industry should start preparing itself for world trade in emissions certificates. Wind is ideal for this approach, but not on its own, he believes. The strongest approach will be through co-ordination with other energies, especially biomass. All in all, he raises an urgent plea for the government, the wind industry and other export institutions to develop creative and intelligent strategies so that they are ready for the market developments just down the road.