EU threatens German renewables support

Commission rules that new energy tax is "new state aid" that should have been notified

The European Commission warned yesterday that it might order Germany to abolish new financial support for renewable energy introduced with this spring's energy tax, causing uproar in the country's large wind power industry.

According to the Commission, the increased electricity prices as a result of the new tax will automatically raise the subsidy level for renewable power generators. This is due to the design of Germany's "feed-in" law, which fixes the price that distributors must pay for renewably generated power at between 65 and 90% of the retail price. Acting commissioners have given Germany one month to justify the increase, failing which the Commission has the power to order its reversal.

The German Wind Energy Association (BWE), which represents wind turbine operators, reacted with fury to the decision, which it had attempted to avert by writing to all commissioners on Monday. BWE chairman Peter Ahmels described it as yet another attack on the feed-in law, which has enabled Germany to develop Europe's most successful wind industry. He vowed to mobilise politicians both at home and in the European parliament in its defence.

The commissioners noted that Germany's installed wind capacity had grown hugely from 173MW in 1992, the year after feed-in was introduce, to 2,875MW by 1998, while production costs had halved. Indicating that this might justify a review, they noted that other member states also were operating feed-in systems with lower prices and still achieving considerable growth. " Germany will have to present information showing that the intended increase can be considered as justified," they said.

The ruling appears to represent a hardening of the Commission's view that support systems for renewable energy should be made more competition based. Earlier this year, the EU executive had to shelve plans to propose an EU directive that would have pushed member states in this direction under pressure, notably, from the German wind industry (ENDS Daily 12 May).

In a second line of attack on yesterday's decision, the BWE argues that acting commissioners have flouted their self-imposed obligation not to launch new and politically controversial actions after their mass resignation in March. In addition, Mr Ahmels told ENDS Daily, the Commission had promised to wait for a judgement expected next year from the European Court of Justice on whether German utility Preussen Elektra could recover money paid to renewable power generators on the grounds that the feed-in law was a state subsidy that had not been properly notified to the EU authorities.

Follow Up:
European Commission, tel: +32 2 299 1111; BWE, tel: +49 541 350 600.

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