Germany aims to give renewables a tail wind

Plan to revise renewables subsidy law includes more support, massive increase for solar

A parliamentary proposal for revision of Germany's energy law, which gives more financial support for energy from renewable sources, yesterday underwent its first reading in the Bundestag, Germany's lower parliamentary house.

The original 1990 law aimed at doubling the amount of electricity from renewable sources by 2010. It particularly favoured wind energy, and has been instrumental in expanding Germany's wind energy industry. The new law will instead give highest subsidy level to solar energy, increasing it about six-fold while keeping subsidies for wind approximately the same.

Overall, the new law will support electricity generated from water, wind, solar, geothermal, landfill gas, sewage gas and biomass. It will exclude hydropower, landfill and sewage gas plants with a capacity over 5 megawatts (MW) and biomass plants of more than 20 MW.

Subsidies will be decoupled from retail prices, a controversial feature of the existing law which led to a European Commission warning that the aid might fall foul of EU state aid laws (ENDS Daily 21 July). A fixed subsidy will be paid per kilowatt hour (kWh), with solar power initially receiving DM 0.99 per kWh. Other sources will get between DM 0.14-0.20 per kWh depending on size of plant, location for wind power and whether plants are new or existing.

The law also gets rid of the clause whereby regional power companies have to buy up to 5% of their electricity from renewable sources after which they must pass the obligation on to their parent company. The power industry in areas where wind power has taken off and exceeds 5% have long claimed that this clause is unfair.

Economics minister Werner Müller estimates the total cost of the new subsidy at DM1.5 billion (euros 0.77m) in the first year and up to DM4 billion by 2005. The government estimates that retail prices will rise by only DM0.001 per kWh as a result of the subsidy increase.

Wind energy producers and environmental NGOs have welcomed the draft. However, energy consumers group VEA called it a "return to the stone age" saying that renewable energy would be unaccountable and that the scheme went against the free market.

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

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