Germany

Germany

Cuts & caps proposed for German feed-in tariff

Consumers cannot pay any more, says environment minister

A series of proposals designed to restrict further spiralling of the costs that must be shouldered by German households for the country's transition toward a renewables-based energy sector has been published by federal environment minister, Peter Altmaier.

Several of the ideas would reduce feed-in tariff (FiT) payments for new or existing renewable generation projects, including offshore wind farms, raising the spectre of investment flight just as Germany's offshore wind industry appears to be on the verge of making significant progress

Altmaier's draft policies include a freeze in 2014 for the renewables levy – which households and non energy-intensive businesses pay and which funds Germany's FiT – at its 2013 level of €0.0528/kWh. After that, the levy would be allowed to rise by no more than 2.5% per annum.

The renewables levy has increased sharply over the past five years, with growing consumer resistance to further charges an issue in the upcoming federal election.

In order to accommodate the levy freeze and its later, slower growth, the environment minister has proposed a series of restrictions on payments to renewable generators, only some of which are likely to effect offshore wind projects. One suggestion is for existing renewable energy generators, presumably including offshore wind operators, to pay an "energy solidarity contribution" in the form of "a small and acceptable reduction in feed-in tariff." This could include a retroactive element, meaning that back-dated changes to FiT payments risk being introduced.

Another is for a one-off stop "for a certain number of months" in FiT payments to new renewable projects in order to "balance" the renewable levy's incomings and outgoings.

Altmaier hopes his proposals will enter into force before the German parliamentary summer break in early August, and before the national election in September. However, they are likely to attract strong resistance from the opposition Social Democrat and Green parties as well as from fellow federal minister, Philipp Rösler, who has his own views on how Germany's energy sector should be managed.

The proposals threaten to undermine investor confidence in Germany, argues the country's powerful renewables industry. "Of course electricity costs are important, but security of investment must also be achieved. These surprise proposals from the federal environment ministry are miles away from the ordered sustainable development of the renewables energy act that we need. It is not thought-through, is in many parts unclear and tries to tackle only symptoms rather than underlying

problems," responded the federal wind energy association, Bundesveband Windenergie.

Crucially, Altmaier's proposals fail to solve the main paradox of Germany's support system: that the more renewable capacity that comes online, the lower the wholesale price of electricity, but the larger the gap between wholesale prices and the feed-in tariff that has to be funded via the renewables levy. A plethora of studies and investigations are underway looking at how the system could be adjusted to prevent such falls in wholesale energy prices. One option would be to increase the the price attached to the EU's increasingly-discredited carbon dioxide certificates. But the German government is resisting such a position at EU level, notes federal renewable energy federation, Bundesverband Erneuerbare Energien.

 

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