German consumers to pay for offshore cable failures

New levy to support rapid grid expansion

If Germany’s transmission system operators (TSOs) fail to complete offshore cable connections in time to coincide with the commissioning of the offshore wind stations they serve, the country’s electricity consumers will have to shoulder most of the damages payable, according to a draft law released today by the German cabinet.

Current delays in offshore cable construction are alone expected to result in damage claims of about €1bn, with the TSO charged with developing the German North Sea offshore grid, TenneT, under fire.

The federal government’s draft law has provoked controversy because even in cases of negligence a TSO would pay no more than 20% of any ensuing damages. The vast majority of such costs would be rolled over to consumers, in the form of a €0.0025/kWh levy, which could add up to €8.74/year to the energy bill of an average four-person household.

Industrial consumers, many already privileged via reduced renewable levy rates, are given special treatment, in that they will pay reduced offshore risk levy rates.

The decision to make electricity consumers liable for the majority of the costs resulting from cable delays and failures is necessary, says the government, because it will assist the country in achieving its 2030 offshore wind capacity target of 25GW. The new rules will also contribute to Germany's security of electricity supply, says the draft law.

Critics of the policy argue that it represents yet another levy on consumer electricity prices.

The draft law is expected to take effect before the end of this year.

Costs for operators

Under the government’s plan, offshore wind operators would face some losses if they experience cable delays and/or failures. These would include receiving only 90% compensation for lost feed-in tariff payments, with compensation payable from the eleventh day after a cable is unavailable.

Furthermore, offshore operators would see the periods during which they receive compensation for cable unavailability subtracted from the twenty years for which their projects receive feed-in tariff payments.

For their part, TSOs will be required to reduce the potential burden on consumers by taking out insurance on "economically insurable risks."

The draft law also requires TSOs to draw up a binding offshore network development plan, which will set a date for completion and the location of new offshore cables to shore. Offshore station developers can alter construction schedules up to 30 months before completion of the cable they plan to use.

These rules will replace an existing inflexible system that sees unconditional and untransferable pledges for cable connection granted to individual offshore projects.


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