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New renewables law finally passed with cut to onshore wind tariff
1 August 2004
Lower rates of pay for wind power came into force this month in Germany with the passing of an amended version of its renewable energy law after much parliamentary dispute. For future wind projects, the wind rate drops from the current EUR 0.088 to EUR 0.087/kWh for at least the first five years of operation; in each subsequent year, the rate for new projects will be reduced by 2% annually, instead of by the previous 1% a year. Existing projects get the rates operative when they were built. From the federal wind association, Bundesverband Windenergie, Peter Ahmels says the annual reduction takes no account of inflation, making it an effective 4% drop. Over the next ten years, he says, wind rates will fall by 35% "by which time the price will match the cost of conventional generation." The amended law also places restrictions on projects eligible for the amended law's rates. From this time next year developers must produce documentation verifying that a wind plant will produce at least 60% of the output of a defined standard site to qualify for the premium rate. On a more positive note for the wind industry, the law improves payments for offshore wind power. The rate for offshore plant online by end-2010 is EUR 0.091/kWh for at least 12 years. As with onshore plant, the period for which the rate is applicable is dependent on a wind plant's performance compared with a standard reference turbine. Once a plant has met the reference turbine's output, payments drop to EUR 0.0619/kWh for offshore plant and to EUR 0.055/kWh for onshore plant. From 2008, the rates for new offshore plant reduce by 2% each year. The 2% reduction for onshore plant starts next year. A review of the law is due at the end of 2007. While conditions are tougher, Ahmels is confident that improvements in technology will mean that wind power stays profitable. Others welcome the market stability the law provides for the next three-and-a-half years.
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