The new tariff explained

This article covers the details of the tariff under Germany's new renewables law. More differentiation between high and low wind speed returns and annual tariff decreases are the main changes.

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More differentiation between high and low wind speed returns and annual tariff decreases are the main changes in Germany's new renewables law compared with earlier drafts. The tariff applies for 20 years from the date of commissioning. For old plant, the clock starts ticking from 2000.

For the first five years of operation, wind plant operators get DEM 0.178/kWh. After that, the rate drops to DEM 0.121/kWh for wind plants that generate 150% or more of the output of a "standard or reference turbine" (Windpower Monthly, January 2000). This is lower than the DEM 0.138/kWh proposed in the previous draft. For other turbines, the peak rate payment period is extended in two month steps for each 0.75% that output fails to reach 150% of the standard turbine's output.

The draft law gives an example. If the output of a turbine is 144%, this is 6% less than the 150% of the reference turbine's output. This 6% is divided by 0.75% to yield the figure eight, which is then multiplied by two months to give 16 months. Thus the higher rate is payable for six years and four months before dropping to DEM 0.121/kWh.

An annual decrease in the two fixed rates of 1.5% a year starting from January 1, 2002 is a new detail in the law.

The tariff for offshore plant more than about three miles from land, on-line by end 2006, is DEM 0.178/kWh for nine years.

For turbines already in operation, the mechanism for new turbines applies, with one amendment. Half of the period for which turbines have operated up to April 1, the day the law kicks into effect, is knocked off the period calculated for the highest payment rate. To protect owners whose turbines -- because of their age -- no longer qualify for the higher rate, all turbines in operation before April 1, 2000, are guaranteed DEM 0.178/kWh for at least four years.

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