Green tax and fair grid access

An eco-tax on all electricity except for renewables is one of the most significant clean energy promises to have emerged from Germany following the victory of the Social Democratic party (SPD) in September's general election. In a deal with the Green party -- the SPD's chosen partner for a coalition majority government -- a series of taxes are to be levied on energy to encourage conservation and the increased use of clean energy technologies.

For electricity this means a tax of DEM 0.02/kWh, plus sales tax of 16%, on all power produced by other than renewables and "highly efficient" plant. Highly efficient is presumed to be a reference to combined heat and power plant. Energy intensive industry will be exempt from the tax increases. A CO2 levy was avoided in order not to hit German lignite and coal production.

Furthermore, a pledge in the coalition agreement gives renewables and energy saving priority over other technologies in the country's energy supply and the use of renewables is to be actively promoted. "In this way we improve renewable energy's price competitiveness in generation and trading," the agreement says.

Changes are also promised to the existing pro-utility arrangements for third party access to the grid, without which renewable generators have no direct access to customers. The new government intends to introduce a "clear legal arrangement" for non-discriminatory access and will pay special attention to "the creation and securing of fair market chances for renewable and domestic energy sources as well as a fair distribution of the costs of these future-oriented energies." The SPD believes such rules will obviate the need for an electricity regulator.

Nuclear -- which has been promoting itself as a clean energy competitor to renewables -- is to be phased out. This will entail an agreement with the utility sector on the gradual closure of Germany's 19 reactors in order to avoid vast claims for damages from the nuclear industry. Procrastination will not be tolerated, however. By November 1999 the new government intends to have a law in place putting a time limit on nuclear plant operation. At the moment, operating licences have no limit.

"The coalition agreement is very good for wind and for the whole of the renewables sector," comments Heinrich Bartelt of the Bundesverband Windenergie (BWE), the federal wind association. But he is sceptical of the ability of the electricity tax to do much for renewables. The DEM 0.02/kWh is not enough, he claims, and the tax should apply to large industrial consumers as well as to domestic users.

Neither does the coalition promise on grid access go far enough, according to Naturstrom of Düsseldorf, one of a new breed of green power traders in Germany. It wants a swift passage of new grid access regulations and the creation of a regulatory office. "As in the telecommunications sector, the old monopoly structures can only be eroded by determined political intervention. The existing industry agreement results in excessively high grid costs which allow the established power companies to keep newcomers out of the market," states Naturstrom. It also warns that care must be taken to "ensure that consumers drawing power from renewable energy sources are indeed excluded from paying the electricity tax."

The full picture of Germany's new look energy sector is expected to emerge in a law scheduled to see the light of day at the end of the year "at the earliest." One of the changes on the cards is an increase in the budget for renewable energies at both the economic and research ministries. Germany's Energy Industry Law -- introduced in April to ready the country for market liberalisation and Europe's Internal Energy Market -- is to be reviewed, including the clause enshrining the Renewable Energy Feed-In Tariff (REFIT). One option is to remove responsibility for the premium REFIT payments from the utilities to government. Money would be raised through a national levy to be paid by all power consumers -- as it is in Britain. Alternatively the SPD is considering a requirement for a fixed minimum of renewables power in the energy supply system, with a provision for "credit trading" to allow utilities with no renewables to meet their targets.

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