Limits proposed for utility purchases

The Germany wind lobby is "guardedly optimistic" following the first reading in parliament of two proposed amendments to the Electricity Feed Law (EFL). The proposals called for price guarantees and a more precisely defined "hardship clause." The EFL forms the foundation of the German wind market, the largest in the world for the past four years, and stipulates that utilities must buy all renewable energy at premium rates of pay.

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The Germany wind lobby is "guardedly optimistic" following the first reading in parliament of two proposed amendments to the Electricity Feed Law (EFL). The law forms the foundation of the German wind market, the largest in the world for the past four years, and stipulates that utilities must buy all renewable energy at premium rates of pay.

"Speakers from both the governing coalition and the opposition consider the EFL to be a success and want to continue to support it," stated German wind association Bundesverband WindEnergie (BWE) after the parliamentary debate in late January. The association's Ralf Bischof further pointed out that many politicians were clearly aware of the conclusions of three just published studies [see separate story] which all stressed the necessity of a continuation of premium payments for wind energy.

"We have been able to put across our message and the politicians are listening. Even the larger governing parties, the CDU and CSU, are insisting on having all the figures before considering introducing any changes to the EFL," he claims. The BWE also reports that in the debate, Conservative Peter Ramsauer (CDU/CSU) expressly contradicted rumours that his parliamentary group is considering cutting wind payments from DEM 0.17/kWh to just DEM 0.12-14/kWh.

But, as Bischof points out, EFL payments are linked to the end consumer price of power and this price may drop as a more competitive atmosphere starts to pervade the power sector. So even without a formal cut in the EFL rates, wind payments are likely to sink once competition bites.

Two amendments

Up for discussion in parliament were amendments tabled by two separate groups. The Büendis 90/Green party wants the government to guarantee an economic price for wind power generated in less windy indland areas. A second proposed amendment from the Upper House of parliament, made up of representatives of Germany's Länder or states, is largely based on a blueprint from the state of Schleswig-Holstein. It suggests a more precise definition of the so-called "hardship clause," which theoretically allows utilities in supply areas with many wind farms to pass on the costs of their premium payments for wind power to their (rich) holding companies. The Länder also propose taking wind energy generated offshore out of a legal vacuum and into the sphere of operations of the nearest utility onshore. While this suggestion was generally welcomed, the hardship clause amendment met with considerable opposition.

In detail it proposed a "double 5% ceiling." If wind power on the grid exceeded 5% of the power generated or bought in by the utility in a calendar year, then the obligation to buy wind power would be passed on to the next utility up the chain of supply. If wind generation also hit 5% ceiling of that utility's total power generation, then the EFL obligation to buy wind power would lapse.

Members of parliament from the opposition Green and SPD parties sharply criticised the proposal. Even Claus Möller, economy minister in Schleswig Holstein, where the idea originated, admitted the problem of spreading the cost of wind generation should be given more thought.

Legally, such a ceiling could also pose problems. By German standards, the EFL is a simple and clear piece of legislation. It did not foresee the introduction of any limit on the amount of renewable energy eligible for premium rates. Nor has the relation between the volume of kilowatt hours generated by renewable energies and the additional costs a utility has to bear been clearly defined: to date the utilities have kept these accounts under wrap. What is more, savings they achieve in transmission and transformer costs through generating wind power close to the consumer have not been satisfactorily investigated.

Meantime, the European Directive on electricity has given clear priority to electricity generated from renewable energies, a ruling which to all intents and purposes supports the EFL and weakens any arguments for a ceiling on percentage of renewable energy in national power supply.

Cost in perspective

In the build up to January's parliamentary debate, the Wirtschaftsverband Windkraftwerke (WVW) strongly objected to utility complaints about the "financial burden" of wind energy. The DEM 0.17/kWh for wind generated power lies well below the end consumer price of electricity, it argued, still leaving the utilities with a margin for profit. Utilities are also posting record profits at the moment, such as Preussenelektra's after tax profits of DEM 1 billion for the past year. Claims that wind power is so expensive it cannot be afforded are absurd, says WVW.

During the parliamentary debate, Peter Ramsauer for the ruling coalition parties CDU/CSU pointed out that the electricity utilities association, VDEW, calculates that premium payments under the EFL add, on average, DEM 0.0006 to the price of a kilowatt hour. The environmental problems associated with coal and nuclear power, however, add DEM 0.02 and DEM 0.01 respectively to the price of electricity, while the concession levies demanded by municipalities for the use of their public rights of way for transmission cables add another DEM 0.01/kWh.

The WVW adds that it will commission two studies this year: one will compare the cost of wind and traditional energy generation while the other will examine the ecological effects of wind energy within the electricity generation sector.

The EFL issue has now been returned to parliamentary committees for more work. Although there seems to be a general feeling that an amendment will be in force by the beginning of 1998, BWE's Ralf Bischof has his doubts. In view of the controversial questions to be answered, and the onus on the utilities to open their books to prove that the costs of the EFL are as high as they claim, he questions the likelihood of reaching a consensus within this legislative, due to close with federal elections in autumn 1998.

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