System operators to pay transmission -- Offshore breakthrough

Large industrial consumers of electricity in Germany raised a storm of protest last month over a new law requiring transmission system operators (TSOs) to provide grid connection for offshore wind stations. The infrastructure planning acceleration act, they said, would cost electricity consumers billions of euro and double the network charges on their bills. The claims were backed by four German state governments, who complained bitterly against hidden extra subsidies to wind power, saying they should be part of the existing renewable energy law.

The complaints were quickly shot down by the Bundesverband Windenergie (BWE), the German wind energy association. It says the cost claims are inflated and based on the presumption that 20 GW of wind plant would be under construction between 2007 and 2011, the period which the law applies to. In fact, about 1500 MW of offshore wind plant for a total cost of EUR 3.5 billion may benefit from the law, says BWE. Grid connection would account for about 25% of the total, or EUR 900 million. Written off over 20 years, the annual cost to German consumers, says BWE's Matthias Hochstätter, would be EUR 0.00009/kWh.

The wind industry won the argument. The law, after passing the lower house of parliament in late October, was rubber stamped by the upper house on November 24 despite the protests. It is enthusiastically welcomed by the wind industry. "A new chapter has opened in Germany's energy supply. Offshore wind stations and onshore conventional power stations are at last to be treated the same," says Fritz Vahrenholt of Repower Systems. He points out that 30% of the cost of offshore wind power lies in transmission costs. The law will free an "investment logjam" that has existed for years, blocking wind power development in the Germany North Sea and Baltic Sea, adds Vahrenholt.

So far Germany has no offshore wind generation and the first demonstration plant is not expected online until 2008 at the earliest. Transmission System Operator E.ON Netz is not so sure the law will make much difference to the slow progress. "It might save three to five months out of eight to ten years of planning procedures," he says. "If you want to speed developments, you have to cut back on the personal rights of citizens. This is the problem."

In an attempt to reduce public opposition to new overhead lines, the law rules that all necessary 110 kV cables may be installed underground and 380 kV lines may also be buried out of sight to avoid residential areas or protected landscapes. As well as speeding the way for offshore transmission, the regulation is designed to specifically help onshore wind projects planned for a 20 kilometre-wide corridor along Germany's coastline get connected to the main transmission network. It is also intended to facilitate a requirement for several hundred kilometres of high voltage cable identified by the Deutsche Energie-Agentur in 2005 in a report on integrating wind power, known as the DENA study.

Under the law, the additional costs of allowing underground lines will be accepted by the German energy regulator, Bundesnetzagentur, and taken into account when calculating network usage charges. The law requires TSOs to shoulder all cable construction costs on behalf of consumers, including those already incurred by offshore wind developers. The costs will be spread equally across Germany's four transmission network operators before being added to consumer bills.

At least one concern remains, however. The Green party fears the heavy handed law conflicts with Germany's constitution and with EU regulations. Rather than speeding wind projects on their way it could hold them up for years in legal wrangling.