NEW THREAT TO RENEWABLES LAW; Bombshell at Hannover

A bombshell was dropped on the wind business gathered at the Hannover Trade Fair last month by one of the windiest German states. It announced plans for a series of modifications to the foundation of the country's renewables market, the Electricity Feed Law (EFL). The proposed changes included an immediate reduction of rates paid in the windiest areas and a 15 year cap on all EFL contracts, after which point wind rates would be no more than the "long term avoided costs" achieved by the purchasing utility.

Furthermore, the Lower Saxony proposal contained a clause which would eventually lift the EFL's obligation that utilities pay for electricity supplied from renewables sources. Instead, in 1999, the extra cost of wind and other renewables would be forwarded to taxpayers via the federal treasury.

Announcing the plans, Lower Saxony's economy minister, Peter Fischer, explained that in return for the changes, the utilities would desist in their attempts to have the EFL declared illegal before the Federal Constitutional Court. Fischer described his proposal as a "pragmatic compromise" to put the utility sector's ongoing dispute over the EFL to rest.

But as Fischer's statement unfolded at the Hannover fair, the atmosphere thickened with disbelief, finally exploding in a wave of sharp criticism. Several market observers said they feared that Lower Saxony's Minister President, Social Democrat Gerhard Schroeder, had sold out the wind industry to Hans-Dieter Harig, chairman of powerful utility Preussenelektra. Fischer had merely been sent out by Schroeder to let the wind industry know about it.

Traditionally Lower Saxony, with some 130 MW of wind power, has been regarded as one of the best regions for wind. But if the EFL amendments go through, sales would rapidly stagnate. "Ten years after the Chernobyl disaster, Lower Saxony is demolishing the EFL," said one industry member. "We might as well pack up our stands and go home," added another, while a third feared this could be the swan song of the wind industry.

Some, though, were less quick to hysteria. They pointed out that German law is not made by either Harig or Schroeder. In fact, Preussenelektra could yet again find itself sharply called to order by Bonn.