Renewables support with no support

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Legislation to liberalise the electricity market in Austria, in force since February, has received a cautious reception from the country's renewable energy lobby, Bundesverband Erneuerbare Energie (BVEE). Although the law favours renewables on paper-with a Renewable Energy Feed-In Tariff and provision for green power trading-BVEE warns that renewables hardly stand to benefit.

The Elekrizitaetswirtschafts und organisationgesetz (Elwog), as the law is called, is Austria's take on the EU's electricity Directive for the Internal Energy Market. The law must be adopted by each of the country's nine Länder. It requires at least 3% of Austrian power consumption to come from renewables by 2005. The responsibility to meet that obligation will lie with operators of distribution networks.

It is unclear if the law, which does not create a competitive market for renewables, is in accordance with EU law as laid down in the Directive. An attempt to provide protection for such infant renewables markets is contained in plans for a separate Directive for a single market for renewables (page 24). This, however, has been opposed by some sections of the European wind lobby, particularly in Germany. BVEE is also unhappy. It points out that the law does not include any sort of control to punish grid operators which do not comply with the 3% obligation. Only two Länder have discussed imposing a fine to equal the payment a distributor would have paid to meet the 3% target and investing the proceeds in renewables projects.

Meanwhile, the Austrian wind energy association, Interessen Gemeinschaft Windenergie, is lobbying the Länder to require that half of the 3% obligation is generated from wind. If such a plan is adopted, it will require the installation of 400 MW of wind turbines. Biomass farmers are protesting the move, pointing to at least one Land where the 3% target has already been achieved through the use of biomass.

Free market REFIT

Elwog includes two mechanisms to achieve the 3% obligation-freedom to market green power within and outside Austria, and a continued minimum subsidy for renewable operators, similar to Germany's Renewable Feed-In Tariff (REFIT). BVEE welcomes the first mechanism, which opens the eco-power market before small customers are confronted with competition. BVEE's Ulfert Höhne calls it a "model for the rest of Europe."

The problem, Höhne says, is that three other factors will prevent the green market from flourishing. First, renewables power is not exempt from the energy tax of ATS 0.1/kWh (EUR 0.007/kWh) plus value added tax of 20%. Second, Austria's grid use tariffs, around ATS 0.9/kWh (EUR 0.07/kWh), are so high that the green market will be suffocated at its first breath. He points out that there is a precedent for exemption from grid charges: they are not applicable to electricity used to power pumped storage, which is sourced mainly from German nuclear and coal plant. The BVEE is calling for renewables power to be freed from grid charges until a market share of 5% is achieved, about the equivalent of power used in pumped storage plant.

In addition, power generated from small hydro plant is not allowed to be marketed freely in the new law. BVEE argues that this cheap form of energy would have lowered the average price of the mix of renewables generated power.

Meanwhile, the Austrian REFIT is expected to be in place by August, with rates of pay for renewables higher than those currently paid (box). The subsidy is to be financed by a levy on the general grid-use tariffs, spreading the costs across all power consumers. Further, operators of distributor grids, who face additional costs due to the uptake of renewables power, will be reimbursed with funds raised by the levy on grid-use charges.

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