The German government is preparing a draft law that would allow electricity transmission system operators (TSOs) to pass on some of the costs of offshore wind cable failures to households and to commercial and small industrial consumers.
A draft law is expected to be passed by cabinet before the parliamentary summer break at the end of June, setting the stage for parliamentary debate. “We hope the law can take effect at the end of 2012, or beginning of 2013,” said Andreas Wagner, manager director of Stiftung Offshore-Windenergie, an offshore wind operation and research foundation.
The initiative follows admission by TSO Tennet, responsible for cabling in the North Sea, that cable risks associated with the emerging offshore wind secotr are too significant for it to cope with alone. The issue of liability is a pressing one, as any further delays in the construction of offshore wind stations will increase already-existing doubts about whether Germany can achieve its 10GW targets for offshore capacity by 2020.
A principal risk is delay to cable construction, raising the spectre of newly-constructed offshore stations standing idle and with owner/operators facing lost earnings and, potentially, being unable to make debt repayments. Alternatively, wind station construction itself could be slowed down to await cable laying progress, increasing capital costs. The second major risk is of cable failure after commissioning and throughout the lifespan of an offshore wind station.
NorNed cable failure
That cable failure can occur has been proven recently by the NorNed 700MW direct-current cable connecting the Netherlands and Norwegian electricity systems. This failed on 18 April, with NorNed’s predicting at the time that repairs would take approximately ten weeks.
The largest of Tennet's nine offshore wind cable projects will connect 900MW of offshore wind capacity with the mainland. If this went down for 10 weeks, and if the offshore stations in question were operating at 4,400 full load hours per year - as clocked up by Germany's first offshore station Alpha Ventus in 2011 - lost earnings could reach around €145 million.
Now, the federal government is proposing tospread the cost of these risks between TSOs, offshore wind station operators, and electricity consumers.An “acceleration working group”, set up in January, has recommended that offshore wind station operators be allowed to demand 95% of lost earnings from their TSO from the eighth day after a cable failure. The TSO must insure against this risk and would be able to roll over the costs to electricity consumers via network usage charges. Germany’s federal energy regulator would monitor the costs.
The proposal represents a departure from existing rules governing liability within the natural gas industry. Here, liability for lost sales is carried primarily by companies selling the gas. Nord Stream, which operates a marine pipeline transporting Russian gas across the Baltic Sea, holds insurance protecting it from losses due to pipeline damage and associated facilities and equipment, but it “does not carry the liability for lost sales of gas in case the pipeline is not available,” explained Jens Müller, communications deputy director, speaking with Windpower Offshore. “This risk is carried by the shipping and selling companies.”
Similarly, “in most cases”, it is the users of the Gassled transportation network in the North Sea that “carry the risk of lost earnings from the sale of gas if the transportation system is out of action,” according to Gassco’s Kjell Larsen.
Offshore costs cause concern
With swingeing cuts planned for German government support of new solar photovoltaic (pv) capacity, attention is now moving to the high cost of offshore wind. The German federation of consumer protection centres (Bundesverband der Verbraucherzentralen) is calling for a moratorium on offshore wind beyond what has already been approved, until there is more clarity on total costs. In its place, the federation favours greater onshore wind capacity.
The solar pv sector is also critical of offshore wind, characterising it as a sector dominated by big energy utilities, in contrast to solar pv’s army of small investors.