Overhaul planned for German renewables law

Package of revisions bows to pressure from utilities, renewables industry, European Commission

The German economics ministry is trying to please the German electricity utilities, renewable power generators and the European Commission with a package of revisions to the controversial "feed-in" law that supports renewables through subsidies related to the electricity retail price. An official proposal is set to emerge before the end of the year.

A fixed subsidy per kilowatt hour (kWh) will be set at different levels for different types of renewable energy and geographical areas, in a complex formula still being worked out. The change could lead to a reduction in support for wind power in more windy areas, while offering more support in other regions.

Changes to the law should also stave off any further action from the European Commission, which complained in July that a new electricity tax introduced in April would lead to an increase in payments due to renewable energy producers from 2001 and should have been notified as new state aid for environmental protection (ENDS Daily 21 July).

The conventional power utilities are particularly keen to see planned changes to the so-called "hardship clause," always due for review by 1999, which limits the amount of renewable electricity a utility has to buy to 5% after which it passes the obligation on to its parent company which again has a 5% ceiling.

In mid-October the electricity giant PreussenElektra became the first generator to announce that it had reached the second tier 5% in 1999 after its subsidiary Schleswag passed its obligation to its parent. It said this meant that the obligation to take and pay for electricity from any new wind power generated by Schleswag under the feed-in law no longer applied.

The new plan is to distribute the utilities' obligation to pay for the higher priced renewable electricity more equitably, regardless of geographical location. Schleswag operates in Schleswig Holstein where 20% of electricity is generated by wind power. According to an economics ministry official, consumer groups are also in favour of this since it will result in fairer pricing for them too.

Economics minister Werner Müller has promised that the draft law will be on the table before Christmas, when stakeholders will be invited to a consultative hearing. Then the draft will go through the standard legislative procedure of upper and lower parliamentary house readings. An economics ministry official told ENDS Daily he expected the law to be adopted by next spring.

Follow Up:
German economics ministry, +49 30 20149.

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