Germany Wind Integration: Owners compensated for lost production

Transmission system operators in Germany can no longer curtail wind power production without compensating turbine owners and must prove they have done all they can to increase grid capacity before being allowed to pass any extra costs on to consumers.

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It took six months, but Germany's transmission system operators (TSOs) are at last getting to grips with their legal obligation to compensate wind turbine owners for curtailment of their production. Amendments to the national renewable energy act introduced at the start of the year for the first time give the country's four TSOs a legal basis to constrain wind production when the combined supply from all power stations feeding into a local network threatens to exceed demand. But the law also requires that TSOs compensate owners for lost revenues.

The first compensation agreement is now complete. Acting on behalf of wind turbine owners, the national German wind association, Bundesverband Windenergie (BWE), has made an agreement with E.ON's two high-voltage companies, E.ON Netz and Transpower, for owners to be compensated for 90% of revenues lost on sales of electricity that would have been generated had the TSO not constrained production. BWE says the deal is fair. Winds do not blow steadily enough for turbines to continuously operate at maximum capacity for any particular mean wind speed. The agreement is expected to be precedent-setting and BWE is optimistic that this "practical solution" will be adopted by the other three TSOs.

The amended renewables law further stipulates that all newly installed turbines must be equipped to facilitate remote control of their output, while turbines installed before 2009 must be retrofitted so their production can also be constrained at the request of a TSO.

The amendments to the law replace the previously opaque arrangements set out in the renewable energy act of 2004. The 2004 rules allowed voluntary bilateral agreements directly between a network operator and a wind plant owner. In return for agreeing to comply with curtailment orders - without compensation - owners were allowed to connect their wind plants to the grid. Knowing that wind output could be curtailed if necessary, the TSOs allowed more new wind capacity onto the network than would otherwise have been the case.

According to E.ON's high-voltage network division, voluntary agreements allowed for more than 1 GW of additional wind capacity to be connected in its area alone since June 2003. From this capacity, 99% of production has flowed into the grid. The federal environment ministry estimates that in the 2004-2006 period, 74 GWh of wind power was curtailed and turbine operators lost about EUR17,600/MW as a result in 2006 alone.

Restoring the principle

While voluntary curtailment was a pragmatic solution to getting more wind generation on to the network, it collided with a main principles of Germany's renewable energy law: that all renewables generation must be taken on to the grid. The amendments to the law introduced this year solved that dilemma, but left the TSOs and the wind industry to work out the details of the compensation.

Under the law, the TSO is permitted to roll over any extra costs to consumers. But before doing so, it must demonstrate that all possible measures to optimise, improve and expand the capacity of the network to do away with any need for curtailment had been taken. Only then can the feed-in management mechanism be implemented. It is the job of the federal energy regulator, Bundesnetzagentur, which has responsibility for monitoring network charges, to make sure that the TSOs comply with the law, says BWE's Ralf Bischof.

Under the new arrangements, E.ON has curtailed output 15 times in the first half of this year. This affected 1080 MW of wind capacity in four regions in northern Germany. The curtailments lasted from 27 minutes to 305 minutes and the reduction in output ranged from 40% implemented on 13 occasions, and 70% on two occasions. The combined total capacity of all power stations in the north German region of Schleswig-Holstein, including nuclear, coal, gas, hydro and wind is 4853 MW. Wind makes up 2700 MW of that.

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