Germany addresses offshore liability

Tuesday, 4 September, 2012 - 14:45

At its 29 August cabinet meeting, the German federal government established a compensation scheme for delayed offshore wind farm grid connections and introduced a binding offshore grid integration plan. The German parliament is expected to finalise and pass the Third Act for the Modification of Energy Regulation (Drittes Gesetz zur Neuregelung energiewirtschaftlicher Vorschriften) this year.

Once the legislation goes into effect, operators of power transmission grids will be liable for damages in the event of delays in connecting wind farms to the grid. Some of the resulting costs can be passed on to the consumer. Also according to the new regulation, offshore wind farms will no longer have an individual right to a grid connection. Instead the grid operators will be required to submit an annual grid development plan which will serve as the basis for grid connection rights for offshore wind farms. The grid operator is required to issue a binding grid connection guarantee 30 months prior to a grid connection.

To protect consumers from excessive rate hikes and compel grid operators to assume greater responsibility, grid operators will only be permitted to charge a maximum of 0.25 €-ct/kWh to cover the costs of damages paid for delayed grid connections. The cap goes down to 0.05 €-ct/kWh after the millionth kilowatt hour of energy consumed. Depending on the extent of the damages, grid operators will be expected to pay a 5% to 20% share of the total damages themselves. A transitional regulation will apply to wind turbines affected by delays prior to the passage of the new law.

German Consumer Minister Ilse Aigner took a stand against the planned liability regulation a week prior to the cabinet meeting. In response to the minister's protest, the threshold for the reduction in the charge passed on to large-scale electricity consumers was raised from 100,000 kWh/year to 1,000,000 kWh/year.

Philipp Rösler, the German Minister of Economics and Technology, says that the new regulation represents a "fair distribution of the burden". Rösler said that the new energy economy was a once-in-a-century project which, "requires an effort from all of us and will not come without a price tag." German Environment MinisterPeter Altmaier said of the draft bill, "Once this liability bill becomes law, it will remove a huge barrier to the expansion of offshore wind energy. The next step will have to be ensuring that the electricity generated at sea finds its way to the centres of consumption. Sustainable electricity has gained a level of importance which necessitates better coordination of grid expansion and the further development of renewable sources of energy."

Katharina Garus

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