Market improves but some uncertainty lingers -- Germany's coming-out year

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This year will see the first truly offshore wind turbines go up in German territorial waters. Work begins in the summer on installing six, 5 MW Multibrid turbines at the Alpha Ventus offshore test station 43 kilometres north of the island of Borkum in the North Sea. Power will begin to flow to shore in the autumn. Meantime, Geo and WPD are expected to start site work on their respective five turbine and 21 turbine projects in the Baltic Sea and Bard Engineering intends to install a 5 MW machine in the Jade estuary near the port of Wilhelmshaven. It will be the country's third near-shore turbine and follows installation of an Enercon 4.5 MW at Emden, 40 metres into the North Sea, in 2004, and a Nordex 2.5 MW off Rostock in 2006, 500 metres into the Baltic.

Germany has nearly 7 GW of permitted offshore projects in the pipeline. The federal shipping office, the Bundesamt für Seeschifffahrt und Hydrographie (BSH), issued its 20th permit, for the 80 turbine Hochsee Windpark He dreiht in the North Sea, in December. Seventeen of the permitted projects are in the North Sea and three in the Baltic Sea (table: Windpower Monthly, November 2007). Altogether the BSH is handling 47 projects, of which 40 are in the North Sea and seven in the Baltic Sea.

A further two projects, located within 12 nautical miles of the coast, have been permitted by the relevant state authorities, rather than BSH. They have a combined capacity of 77.5 MW. A third 264 MW project also in the 12 nautical mile zone has a preliminary permit, bringing the near-shore pipeline to about 342 MW.

Germany's transmission system operators (TSOs), who are legally required to transport the power to shore as soon as the permitted wind stations are commissioned, are expecting to connect up to 4.4 GW of offshore capacity by the end of 2011. Of this, about 3.1 GW will feed to the German North Sea coast, according to E.ON Netz. Bottlenecks in cable supply could reduce that expectation to 1.6 GW. Vattenfall Europe Transmission believes it will be connecting 1.3 GW to the Baltic Sea coast by the end of 2011.

A network expansion law aimed at increasing transmission capacity for electricity feeding into the system from a number of new coal power stations planned in the north of Germany as well as offshore wind power has been proposed by government. The Energieleitungsausbaugesetz law is to be presented in May. It proposes fast-tracking permits for new transmission wires and extending the deadline by which the TSOs have to provide connections for offshore wind power production from 2011 to 2013.

Furthermore, as part of its revamp of the German renewable energy law, the government proposes raising the rate at which utilities are legally required to buy offshore wind power. The proposal is for an increase to EUR 0.11-0.15/kWh for the first 12 years, up from the current rate of EUR 0.091/kWh for projects coming online by 2010. After the first 12 years the rate drops to EUR 0.035/kWh. The 12-year period is extended by 0.5 months for each full nautical mile a wind farm is located beyond the 12-mile zone from shore. Offshore wind power has also been given a lead role in Germany's Integrated Energy and Climate Program (IECP), released in December. The IECP sets a target for 25 GW of offshore wind by 2030 and proposes zones for offshore wind generation in which competing uses of the seabed are excluded.

Investor interest

The raised prices and political goodwill are attracting serious investor interest. Trianel European Energy Trading, in which around 80 predominantly German municipal utilities are involved, announced in January that it had taken a 300 MW share in the 400 MW Borkum West 2 project developed by Prokon Nord Energiesysteme, though it is still without a construction permit. Until now Trianel has concentrated on fossil fuel generation. The wind involvement is in line with its aim to "diversify its generation portfolio and to contribute to achieving climate protection targets." Borkum West 2 is expected to use 80 Multibrid 5 MW machines. Multibrid was owned entirely by Prokon until French nuclear giant Areva acquired 51% of the company in September.

While Trianel is apparently keen to proceed, the big German power companies may be treading water with their offshore project, suspects energy lawyer Hartmut Gassner of law company Gassner, Groth, Siederer & Coll. "They're not only waiting for higher payments due under the revision of the renewable energy law, they are holding back with billion euro investments in offshore wind until they know whether the next national government will alter the nuclear phase-out law to keep the German reactors on line for longer," he says. It will be a long wait. National elections are not due until autumn 2009. Gassner is a member of EnergieVerein, a forum for energy law, policy and renewable energies.

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