Potential grows for trade in green power

The framework of a lively competitive market in which renewables can play a part seems to be emerging in Germany -- with a minimum of government intervention and to the surprise of all involved. Ground breaking talks on grid access have opened the door to simple and practical arrangements for generators wanting to feed small and irregular volumes of power into the grid. The scene is thus being set for Germany's new breed of green power trader to buy and sell wind on the open market.

The surprise breakthrough came during "round table" talks in late November on rules for grid access at the local and regional level. From among ten participating bodies -- representing the electricity sector, the federal economy ministry, and consumer organisations -- an unlikely alliance emerged. Greenpeace joined forces with the Vereinigung Deutscher Elektrizitätswerke (VDEW), the German utilities' association, to push for a transparent mechanism for grid access for small generators at a fair price.

"This looks to be good news, says Ralf Bischof of green trader Naturstorm in Dusseldorf. But he warns that a deal negotiated by VDEW is not binding on its members. Harald Preukschat of Öekostrom Handel in Hamburg is more sceptical. He says VDEW's willingness to co-operate has more to do with its fear of a state electricity regulator being created than with a desire to help small independent power producers. "It is prepared to make all kinds of verbal promises to lull the competition concerns of government," says Preukschat.

The Greenpeace-VDEW alliance came about when both organisations realised they had already presented similar mechanisms to provide a simple means for household and small commercial customers to change their electricity supplier. These mechanisms, it appears, could overcome most of the obstacles to consumer purchase of green power from renewable generators or green power traders.

Some eight green power traders in Germany are preparing to supply customers with power from exclusively renewables sources. Of these, three are purely traders. Naturstrom, Grüner Strom and Solarstrombörse intend to only buy and sell green power. They will not operate their own plant. Of the other five, three -- Mann Energie, Ökostromhandel and utility-owned EWE Naturstrom -- intend to sell power from their own renewables plant. The remaining two, NaturEnergie and EWS Schönau will not only market their own renewables output, they will also buy and sell green power generated elsewhere. EWS Schönau will include power from fossil fuel-fired combined heat and power plant in its energy mix too. The biggest handicap for these companies has until now been the high cost of grid access.

Differing aims

While VDEW and Greenpeace are moving in the same direction on access to the grid, their aims are not identical. Greenpeace proposes an access model tailored to "clean power" only, while VDEW says it should be applicable to all small generators. Clean power is defined as 50% renewables and 50% gas. Greenpeace says household and small commercial customers should be given priority access to green power. The EU's Directive for an Internal Energy Market expressly allows for this under its Public Service Obligation, says the group.

The VDEW argues, however, that exclusive arrangements for green power disadvantage "conventional" supplies and "contradict the basic premise of equal treatment for all power sources."

Power from renewables is usually consumed locally, so some of the rules of the new free-market agreement between industry and the utility sector on grid access costs should not apply, says Greenpeace. This agreement had left renewables out in the cold. Among the cost which should be waived, according to Greenpeace, are distance dependent charges for transmission over 100 kilometres and the so-called "simultaneity factor" in system services costs. Moreover, grid access costs should be based on use of the low and medium voltage distribution grid only.

The cost of access

If the Greenpeace model is adopted, green power traders can expect to pay access charges of between DEM 0.073/kWh for small commercial tariff customers and DEM 0.124/kWh for household customers, but only in rare cases when the high voltage grids are used. Grid access prices charged by Germany's largest utility, RWE Energie, are DEM 0.1142/kWh for households and DEM 0.0908/KWh for small commercial customers.

The grid access rules presented by Greenpeace were developed by the Büro für Energiewirtschaft und Technische Planung (BET) in Aachen. BET says the mechanism can be quickly implemented, using data already available, and can be done at no extra cost to the grid operator. "It should be expressly restricted to the transmission of clean power to tariff customers," says BET. Household and small commercial customers accounted for about 39% of Germany's electricity consumption in 1997, or some 190 TWh out of a total 480 TWh.

VDEW and Greenpeace agree that small customers should be able to swap supplier without the need for an expensive new meter. Billing should take place on the basis of typical or standardised load profiles. This is already common practice in other countries with liberalised markets and is seen as a vital step towards real choice for the small customer, who becomes free to buy from a green power trader. VDEW says it is working "at top speed" to prepare standardised load profiles for small to medium household customers. A second round table of talks is to be held this month.

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