European commission warns Germany

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In the wake of Germany's general election and the landslide victory of the Social Democratic Party, the political future for renewable energy still remains decidedly uncertain. Premium price payments for wind and solar energy are still enshrined in the country's national energy law, but barriers to the continuing existence of the Renewable Energy Feed-in Tariff (REFIT) are growing in size and number. Meantime fair access to the grid for independent power producers is an area yet to be tackled by energy market liberalisation policy.

Despite massive public and political support, the foundations of the REFIT are under attack from several quarters. The latest broadside has come from Brussels, with competition commissioner Karel van Miert warning that the REFIT does not meet with the aims of the EU's Internal Electricity Market. Back home, the German utility sector has taken the REFIT to the federal constitutional court in a series of law suits (Windpower Monthly, September & July 1998). And all but nine of the 251 members of the Social Democrat Party are challenging the legality of the entire Energy Industry Law, of which the REFIT is a part. They claim it was passed last year without the necessary consent of the upper house of parliament.

Political support

In the days leading up to the federal election on September 27, the Social Democrat and Green parties appeared largely sympathetic to the REFIT system, while the ranks of the ruling Conservative coalition were divided. In response to questions on renewables policy from the Bundesverband Windenergie (BWE), the federal wind association, the governing CDU and CSU, as well as the opposition SPD and Greens all stated their support for a fixed premium rate of pay for renewables power. Only the liberal FDP declined to state its policy.

On the thorny issue of grid access, there seemed little doubt that small independent power producers would benefit more from a Social Democrat Party government in alliance with the Greens than from a continuation of the Conservative parties. The SPD had plans to introduce clear regulations with fixed costs for grid transmission to replace the current agreement between the utility sector and big industry. Small independents are left out in the cold. The Conservative coalition was inclined to leave grid access entirely in the hands of utilities and industry.

Brussels warning

Grid access is only one of the unsolved issues for German wind in the liberalised market. Competition commissioner Van Miert warns that the revised REFIT was not sufficiently amended at the time of its inclusion in Germany's new energy law to allow him to close the case. "I can see no sufficiently regressive element in the new law, even should the minimum price sink over the coming years, which remains to be seen anyway," he states. Support for existing plant is neither restricted to a certain time period, nor to a certain volume of electricity, he says. The EC's Directive on Europe's Internal Energy Market does not allow for market distorting subsidies.

While Van Miert is clearly sympathetic to renewables, he says appropriate support involves a careful balance between environmental and competitive aspects and that it is "especially necessary" for state support to be adjusted to match the competitive situation of each type of renewable energy. Van Miert acknowledges, however, that an effective cap on REFIT payments exists in the clause allowing utilities to stop premium pay for wind power which is generated in excess of 5% of regional electricity supply.

BWE retorts that Van Miert has adopted without criticism the arguments of the German electricity utilities against the REFIT. For its part, the German economy ministry says there is insufficient operating experience with wind plant to introduce a time or volume dependent cap on REFIT payments. The ministry adds that "excess support" could continue for an extended period to aid technology development.

None of these issues is likely to be resolved before publication of the results of a promised government review into the 5% cap on utility uptake of wind. Van Miert seems to expect this review will also look closely at the structure of the REFIT as pressure mounts on Germany to comply with EU policy on liberalisation of the European energy market, on fair and open access to the grid, and on harmonisation of the disparate renewable energy feed-in systems currently in force across Europe.

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