Little of wind energy's current commercial dynamism was to be felt in the lofty rooms of the historic city hall of Kassel in late September despite the staging there of the otherwise dynamically named "Wind Power for the 21st Century," a three-day conference jointly organised by the German wind industry and the European Wind Energy Association. A decidedly academic event, the conference opened with a day of political discussions which were either lacklustre or repetitive of much that has gone before with little attempt to tackle commercial issues such as transmission rules for liberalised markets or how to attract commercial financing.
Indeed, the entire conference seemed out of step with the wind industry's current evolution from a subsidised niche to an emerging commercial force to be reckoned with on global energy markets. When first planned, however, the main theme of this "special topic conference" was "high wind power penetration for the new energy markets." It was clear that many of the more than 400 delegates had come to discuss technical details important for achieving this role for wind rather than to involve themselves in political agenda setting.
It was political issues, however, which dominated the first day, particularly the politics of the German position on the proposed EU directive to harmonise national support programs and create a single European market for renewable energy. Germany wishes to retain a simple system of guaranteed minimum prices, while Brussels favours a mechanism that leaves market forces dictating the price of green energy certificates, which are bought from renewables generators by electricity retailers or consumers -- a proposal which several countries are actively following, including Britain, Denmark and the Netherlands. The aim of the tradable certificates mechanism is to facilitate full integration of renewables into energy markets. As always, opinions on which system is best for reaching the EU's target of more than 20% of electricity from renewable sources by 2010 were divided in Kassel, though the selection of speakers was tilted in favour of the German position.
"This target can only be achieved if the implementation of the directive retains our instrument of support," said Christel Möller, head of energy at the German economics and technology ministry, referring to the Erneuerbare-Energien-Gesetz (EEG) law, which obliges utilities to buy wind power at a fixed premium tariff. "The law foresees support for renewables over a 20 year period, but the proposed community framework would scuttle the German renewables law after just five years," she feared.
Brussels has warned that the EEG probably runs contrary to EU fair competition law, in particular EU regulations governing state aid for environmental protection. A tussle over the legality of the EEG is ongoing between Germany and the European Commission. Brussels is frustrated that the German position is preventing the development of a single market for renewables in Europe. Möller, however, remained unbowed. "I am confident that we will succeed in retaining this law," she said of the EEG.
From the renewables unit of the European Commission's transport and energy directorate general, DG Tren, Wolfgang Palz attempted to pour oil on clearly troubled waters. "Quite rightly it has been pointed out that competition policy in the EU may be a problem for developers of renewable energy," he said. "But the [European Commission] has always believed, as we all have, in the polluter pays principle." Efforts to activate this principle by including the external costs of generation in the price of power from fossil fuel sources have consistently failed, he said. As a result other ways of implementing the polluter pays principle must be found, such as creating a market for environmental credits in the form of tradable green certificates.
The president of the European Wind Energy Association (EWEA), Klaus Rave, also stressed the importance of securing a European renewable energy directive. "We must not fail to establish a directive in a European market that has been deregulated," he said. Without some corrective mechanism, "The subsidies for nuclear and coal mean that these can always generate cheaper than our fledgling industry," he stressed. As a system of energy taxes in Europe has not so far been accepted by member countries as a viable mechanism, "The directive aims to ensure a fair system by other means," Rave said.
With the release the previous week of the latest European Commission draft of new rules governing state aid in support of the environment the subject was a hot topic on the first day. In the new draft Brussels recognises the new wave of state support for clean power generation and indicates that it will allow such aid when it does not contravene the workings of the internal European market. But the German wind lobby remained bitter that its EEG would not necessarily be approved, unlike support systems which relied on market mechanisms to make cross-border trade possible, instead of price fixing. Heinrich Bartelt of German wind association Bundesverband Windenergie said the draft was "totally unacceptable."
fixed prices in the way
Not all sectors of the German wind business, however, support Bartelt's view that Brussels should allow Germany to continue with its premium pricing regime for supporting renewables. A lone German voice at the conference pointed out that high fixed prices were strangling the market for sales of green electricity before it was born. Hauke Beeck of power company Hamburgische Electricitäts-Werke (HEW), which is linked to the Scandinavian power company Vattenfall, argued that the high fixed prices for wind made it impossible for his company to operate as a green power supplier since the product was priced out of the market. Together with oil giant Shell, HEW markets a renewables electricity brand named Newpower.
"The benchmark for the supply side has been fixed through the renewable energy law. On top of that cost we have to add network usage fees and taxes, with the result that the price to the consumer reaches some DEM 0.4/kWh, or sixty to one hundred percent more than the price for conventional power," he said. This high price "prohibits" green tariffs for the physical supply of renewables electricity. As a result, the Newpower concept has been altered: environmentally minded customers are asked to pay for conventional power at a green tariff, with the additional money raised going to support the construction of new renewable plant. Two 1.7 MW E66 Enercon turbines on the Shell Hamburg refinery site are the first projects undertaken.
Beeck's ideal system would be a full institutional separation of the value of electricity as a commodity and the value of its environmental benefits -- in practice a market for tradable green certificates. A prerequisite for such a market is a cast iron system for guaranteeing that each green certificate represents the green value of kilowatt hours that have been delivered to the grid. This is one of the priorities of the EU's draft directive for renewables.
Such certification, however, was not given any priority at the conference. On the contrary, Mechthild Rothe, a German member of European Parliament and keen opponent of the existing draft, put certification at the end of her list of main requirements. Prior to the conference Bartelt declared that certification of origin was not necessary for the successful functioning of "minimum price arrangements" and should remain an option rather than an obligation.
While the "subsidies versus market mechanisms" argument rages among renewables lobbyists in Europe, the use of wind energy around the world continues to rapidly rise. "The average world market growth rate in wind over the last five years has been 40%, only rivalled by the telecommunications industry," said Rave. "I can think of no technology where such progress has been made in such a short period in upscaling plant, cost cutting and in improving technical reliability," he enthused.
Möller was equally upbeat. She praised wind energy for its low specific costs of investment at around DEM 2000/kW (EUR 1020/kW), the reliability of the technology which is available to generate power 98% of the time, and wind's relatively low generation costs of DEM 0.10-0.20/kWh (EUR 0.05-0.10/kWh. She pointed out that her country now has 8500 turbines providing 5000 MW of nominal capacity generating some 10 TWh a year, output which is forecast to rise to 45 TWh by 2010. "This is an optimistic but not unrealistic scenario thanks to offshore developments and the replacement of old plant on land with new and larger machines," she said.
A clear indication of the speed of the sector's growth came with the announcement that the European Wind Energy Association was again revising its goals upwards because they have once again been overtaken by reality. "It is time our realistic targets became more ambitious," said Rave. EWEA's new targets, decided at Kassel, are for 60 GW installed capacity by 2010, up from 40 GW, of which 5 GW is expected to be offshore. "The rate at which wind turbines are installed would need to drop significantly in order for the EU not to surpass the 40 GW target," says EWEA. Annual growth has amounted to 40% a year since 1993 and the 9500 MW of wind power installed in Europe at the beginning of 2000 well exceeded EWEA's 8000 MW target. A new target has also been agreed for 2020: 150 GW, of which 50 GW will be offshore.
Once the first day of politics and national overviews was out of the way, the conference settled down to a series of presentations on integration of wind power into broad power plant load management, as well as presentations on storage potential. Both Denmark's national laboratory at Risø and the German Institut for Solar Energy Technology (ISET) presented new generation prediction systems aimed at facilitating wind energy integration onto the grid. There was also a suggestion that prediction systems could financially benefit wind plant operators in Germany in the future, if they could find ways of joining forces over a wide geographical area. The theory was that amalgamated wind power output could be offered for peak load supplies at competitive prices on an open market. But the 21st century may be well advanced before such market consciousness amongst Germany's many individual turbine operators starts to evolve.
National conference overviews were from a variety of countries, including Spain, France, Ireland, Finland and China. The third day concentrated on hybrid system design and concepts. For the most part speakers established the status quo of research and experience to date and there was little sign of any major breakthroughs or changes of direction. A small exhibition and the well attended poster sessions supplied an additional forum for discussion, though there were a frustratingly large number of "no-shows" resulting in several empty poster boards.
Twenty-one companies exhibited, of which 11 were from outside Germany: three from Denmark, two each from Holland and the UK, and one each from Italy, France and Sweden, as well as the German division of a large US company, Litton Precision Products. It has joined the ranks of traditional major engineering companies keen to sell niche products to the wind industry, in this case slip-rings. Small displays were mounted by seven wind turbine manufacturers and four component suppliers, representing a tiny minority of today's industry. The remaining stands were occupied by organisations, publishers, and companies offering miscellaneous consulting services.
The event was organised by the European Wind Energy Association, Germany's professional wind association, the Fördergesellschaft für Windenergie, and ISET. It was sponsored by turbine manufacturer Enercon and the North Hesse Transport Association.