The Energy Feed Law (EFL) which secures premium payments for wind energy is being criticised by both the utilities' association VDEW and the Industrial Power Association (VIK) and the Federation of German Industry. They claim that flexible and willing co-operation is better than government regulation. But any reduction in the premium payments will be life threatening to the wind market in Germany.

The powerful members of Germany's electricity sector are combining forces in an attempt to lever out the Energy Feed Law (EFL) when it comes up for review at the end of this year. The EFL -- which guarantees premium payments for wind power -- has formed the basis of the rapidly expanding German wind market since the law came into force at the beginning of 1991.

The utilities' association VDEW of Frankfurt recently completed difficult negotiations over the rates of pay for independent power with the Industrial Power Association, VIK, of Essen. Once that job was complete the two sides turned to deliver broadsides on the EFL -- backed up for good measure by the Federation of German Industry.

The managing director of VIK, Hans-Jürgen Budde, claims the EFL stipulates excessively high prices for "eco-electricity" and creates cross-subsidisation. The VDEW is propagating the line that if the government wishes to support renewables, it should do so with investment grants or tax breaks.

In the new agreement with the VIK, payment for non utility generation of electricity is based on avoided costs, studiously ignoring the principle that environmental benefits should be honoured in such payments. The VDEW thinks its scheme ought to apply to renewables, too. According to Joachim Grawe, head of VDEW, the agreement with the VIK, "Has a basic significance for electricity from renewables, but is only of limited use as long as the Energy Feed Law -- which we consider a mistake -- is valid." In fact the VDEW/VIK agreement is not applicable at all to renewables while the EFL is in place.

The Federation of German Industry (BDI), also party to the talks between VDEW and VIK added its expressions of displeasure over the EFL. Carsten Kreklau from the BDI says: "The VIK/VDEW agreement is flexible and can be adapted to practical requirements. In this respect, solutions found under willing co-operation are better than any governmental regulation."

His statement is not likely to convince the renewables lobby. Although the VDEW/VIK agreement has improved payments for electricity from independent combined heat and power (CHP) plant by between 5% and 15%, the kilowatt hour price is still significantly below EFL rates. Wind operators receive 90% of the end consumer price of electricity -- at the moment amounting to nearly DEM 0.17/kWh. The industrial CHP operators, however, are paid a rough average of just DEM 0.09/kWh, although these can range from a mere DEM 0.07/kWh for particularly sporadic supplies to DEM 0.14P/kWh for steady hydro supplies.

Ironically there is political pressure from the Social Democrat dominated parliamentary Upper House to include CHP under the EFL. The Social Democrats argue that the environmental benefits of using waste heat from electricity generation for space or process heating should be recognised. However, the VIK can hardly back this move now that it has barricaded itself into a corner by reaching a voluntary agreement with the VDEW on its own initiative.

Have you registered with us yet?

Register now to enjoy more articles
and free email bulletins.

Sign up now
Already registered?
Sign in