Fixed prices catalyse market in Austria -- Another good year expected

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Austria's mini wind power boom in 2003 is set to continue, at least until the end of the year, says an optimistic IG Windkraft, the national wind lobby group. It anticipates annual installations in 2004 of 160-250 MW, lower than the 276 MW scored last year, but still impressive for a small and land-locked mountain state. Austria now has 415 MW of operational wind plant.

The market is being driven by a nationally regulated wind tariff introduced at the start of 2003. It replaced a series of state-level initiatives, which provided premium payments, but also set caps on the volume of development in some states. The new law sets no caps. The regulated wind price is EUR 0.078/kWh for 13 years for wind energy permitted by the end of 2004 and commissioned before mid 2006. Talks are underway to fix a rate for new plant permitted from 2005.

A further incentive in 2003 was the availability of a tax benefit introduced in 2002 and originally due to expire at the end of the year. To encourage investment, the government offered a cash-in-hand present of 10% of any increase on the previous year's investments made by any industrial company. The offer of a 10% capital subsidy encouraged wind developers to force the pace of their project plans. Right at the end of the year, the government suddenly extended the arrangement into 2004. The effect this year, however, is not likely to be as dramatic as that of last year, since wind companies were not prepared for the extension.


Development this year could also be slowed by a political furore raging over the renewable energy levy component of network usage costs. In December, the economy ministry gave state governments just 24 hours to agree to an increase in the levy from EUR 0.011/kWh in 2003 to EUR 0.018/kWh in 2004. The premier of Kärnten, Jörg Haider, promptly took the opportunity to raise his profile by vetoing the raise.

As a result, Austrian Power Grid (APG) immediately declined to sign contracts for electricity from new renewables plant because the income from the renewable levy -- continuing at the 2003 rate -- would be insufficient to cover the additional costs. "About 120 MW of wind energy is affected," says IG Windkraft's Stefan Hantsch. Legal action is threatening both the APG and the Austrian federal government. The worried Raiffeisen bank, which has financed a number of renewables projects, is paying for lawyers to represent wind and bio-gas operators in the dispute.

Almost all of Austria's new wind stations in 2003 went online in the states of Burgenland (200 MW) and Lower Austria (72.1 MW). The lead developer in Burgenland is AWP, a 100% subsidiary of Burgenland energy company Bewag. It was behind more than half of Austrian wind development last year, having installed 127.15 MW spread across seven sites. In Lower Austria, EVN Naturkraft, a subsidiary of utility Energieversorgung Niederösterreich, installed a single 14.4 MW wind plant at Prellenkirchen.

The largest non-utility development was the 22 MW Raiffeisen wind station of Vestas turbines, owned by the Raiffeisen bank and sited at Scharndorf in Lower Austria. Three wind stations developed by local communities, two with 600 investors each and a third with 1700 investors, accounted for 46.2 MW of new capacity last year.

With almost equal shares of the Austrian market in 2003, Enercon and Vestas were the leading suppliers, Vestas with a 39.8% share of installed capacity and Enercon with 39.5%, according to IG Windkraft. The other three suppliers were Dewind (16.7%), NEG Micon (2.7%) and Nordex (1.4%).

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