Germany

Germany

Talks on hold in face of liberalisation

The all important legal framework for the wind market in Germany has won a temporary reprieve. Parliamentary discussions scheduled for the end of last month, aimed at introducing amendments to the Electricity Feed Law (EFL), have been postponed. It is not expected they will be taken up again until talks start on changes needed to the energy industry law. They will only begin once plans for liberalisation of the national electricity market are further advanced.

The reprieve for the EFL was greeted by the German wind lobby with a collective sigh of relief. "Matters should be put on hold until liberalisation legislation has been passed. Only then will it be possible to decide who should be obliged to pay a renewable energy feed-in tariff (REFIT)," says Uwe Carstensen of the renewable lobby group, Bundesverband Erneuerbare Energie (BEE).

Commenting in late September on the failure of the government parties to agree on amendments to the EFL, federal economics minister Günter Rexrodt confirmed that the law was supported mainly by members of the governing CDU and FDP parties from the north of Germany. They were against a reduction in the premium payments. "Everything will probably stay as it is," he said.

News of the postponement of discussions was broken by federal member of parliament Dietrich Austermann at the unveiling in Germany of the Vestas 1.65 MW wind turbine on September 16, the eve of the Husum Wind trade fair.

Government blank

More information emerged at the fair when Claus Möller, Schleswig Holstein minister for finance and energy, said he expected that discussions on the future of the EFL would be resumed shortly, but he had no idea how they would proceed. "I know of not a single suggestion from the government side on how the future of renewables should be secured," he said.

The EFL has long been under attack by the utility sector for the fixed premium priced payments for wind it requires them to make. Market observers have also criticised its non-competitive nature. Amendments to the law were due to be discussed by the parliamentary economics committee in late September with a view to making final decisions on the future system of payment for renewable energy.

Some idea of the government's view was imparted at the Husum Wind conference by Peter Schmitt of the federal agriculture and forestry ministry. "The government values renewable energies and will energetically support them. Existing plant must have sufficient protection for their present status and new plant must be able to operate economically," he said.

BEE's Carstensen stresses that the existing "Stromeinspeisungsgesetz" law should not be altered until a clearer idea emerges of what the future might bring. A grid levy could be the solution, he says, enabling the financial burden of paying premium prices for wind power to be spread over the whole sector. Until now, utilities in windy areas of Germany have been required to bear the brunt of the existing tariff system under the EFL. Gert Nimz, of utility Schleswag, where most wind capacity is installed, commented at Husum that his company is happy to promote wind energy, "but we don't necessarily want to be paymasters for the nation."

Predictions

Meanwhile, political parties and interest groups have been airing their opinions. The BEE's Heinrich Bartelt reports: "Government and opposition members of parliament increasingly see the sense of letting current renewables legislation run for about another five years. Any anomalies with the European Union Electricity Directive can be cleared up in the new German energy industry legislation." He adds: "It is beyond belief, when members of parliament are silent on the billions in [coal] subsidies and DEM 40 billion tax free nuclear reserves held by electricity utilities, that they fight to prevent the support of pollution free energies of the future."

But two main government parties, the Christian Democratic Union and the Christian Socialists Union, are uneasy about the EFL. Economics spokesman for both parties, Gunnar Uldall, points out that the current rate of DEM 0.17/kWh for wind means that turbine operators in windy areas of Germany are being "overpaid" as technology advances makes machines more efficient. The current system also encourages the use of inland low wind sites which are not as economical as they should be, he says.

Uldall proposes retaining the current EFL rate for two years, but reducing it by DEM 0.01/kWh in 2000 and 2001 as well as putting a cap on the volume of wind power for which premium payments are made. He cites a top level of 5% of a utility's total sales (Windpower Monthly, July 1997). Agreement to the cut by the opposition dominated Upper House is not needed for his political group's favoured reform of renewables legislation, he says. "So it will be passed in any case."

The Verband der Industriellen Energie-und Kraftwirtschaft (VIK), the industrial power federation, is bemused by the Uldall plan. It says that retaining premium rates for two years is counter productive and that the EFL rate, set at 90% of the consumer price of electricity, will fall to DEM 0.1678/kWh in 1998 as electricity prices fall. The VDEW utilities association predicts the premium rate would be even lower at DEM 0.163/kWh. Market observers also expect power prices to fall once more competition is brought in by liberalisation.

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