Netzentgeltbefreiung

“Network fee exemption.” All electricity consumers in Germany have been sharing the costs to build alternative power sources and now to build new power lines to connect alternative power sources, such as the wind parks out in the North Sea, to the power grid. All electricity consumers in Germany? Well, not quite. Businesses that consume a lot of electricity have been getting exemptions from the government, and those businesses’ unpaid share of the costs has then been redistributed among everyone else, mostly private individuals and families. On 06 Mar 2013, the Düsseldorf Higher Regional Court overturned the rebates to high-volume electricity-consuming businesses from the shared costs of building the new power lines, saying the Energiewirtschaftsgesetz [Energy Industry Act] does not allow this exemption.

Update on 14 Jul 2013: The E.U. is investigating the legality of high-electricity-consuming businesses’ exemptions to the German EEG-Umlage and Netzentgelt (this investigation was started in March). If the competition commissioner decides the rebates were impermissible, they might even be eliminated with retroactive effect, leaving companies owing millions of euros. State aid to companies in Europe must be approved by the E.U. commission, said Manager Magazin, to prevent competitive distortions.

Update on 26 Aug 2013: There’s still a paucity of power lines connecting the North Sea wind power parks to the mainland grid. Two of three finished German windparks are connected to the mainland. Not only are power line builders behind on connecting existing ocean windmills, but the maps in German television news show there’s so much more area there that has been zoned for windparks yet to be built, which will also have to be connected up. They’re looking for investors. A “Cuxhavener Appell” was signed by investors in North Sea German wind parks seeking planning security. Chinese companies might be very good at building this infrastructure.

Update on 13 Dec 2013: The E.U. Commission has initiated proceedings against Germany’s EEG-Umlage because of the hundreds of rebates to it that were granted to high-power-consumption businesses. Multiple countries filed complaints about it in Brussels, saying the German exemptions to its own law distorted competition in the domestic European market. The formal start of the proceedings is scheduled for Wednesday, 18 Dec 2013. Experts writing opinions for the E.U. competition authority’s investigation said the rebates to companies were a problem but the payments to small renewable-energy feeders contributing electricity to the system were “not overcompensated,” meaning fine, Süddeutsche.de reported. A German Green party member of the European Parliament accused E.U. energy commissar Günther Oettinger (German CDU) of using the E.U. competition authority’s (understandable!) problem with CDU-granted exemptions to the EEG-Umlage to try to endanger Germany’s entire investment program in renewable power sources, rather than work with Brussels to eliminate the sole sticking point, one that his party would be rather well-placed to fix. Süddeutsche.de said there was great opposition in the European Parliament to the Commission’s announcement that it would try to declare Germany’s entire Renewable Energies Act an impermissible subvention, rather than just the exemptions granted to it “which Berlin has steadfastly refused to touch.” Mr. Oettinger should send a clear message to Brussels that Berlin is now willing to talk about reducing the exorbitant exemptions, the Green party said.

Update on 14 Dec 2013: Spiegel.de reported that E.U. competition commissioner Joaquín Almunia is trying to hurry up and change the E.U.’s Energiewende model before the E.U. election in spring 2014. He will announce plans on Wednesday, 18 Dec 2013, they said, for auctioning off renewable energy subventions (“market premium” model) rather than guaranteeing them (“fixed premium”). His preferred model has been shown to result in the E.U. in countries’ building fewer renewable energy generation sites than planned.

Spiegel.de said it saw internal E.U. documents indicating the following troublesome European components in the competition commissioner’s plan for changing E.U. renewable energy policy. The promised fixed prices for purchasing clean electricity for a defined number of years that have resulted in so much renewable energy construction in Germany are “a thorn in the eye” to Mr. Almunia and his Competition office, said Spiegel.de. Instead, he wants electricity to be purchased from renewable energy generator operators at market prices plus a premium decided in an auction-type process. To keep the premium as low as possible, construction of new renewable-source generators is to be opened up to competitive bidding, with the contract awarded to the builder offering to accept the lowest premium on the electricity their site will produce. Spiegel.de pointed out this adds obvious uncertainty to the apparent profitability of building new renewable energy generators, large and small, but also less obvious uncertainty, such as: companies that win these auctions could go bankrupt, leaving the rewewable energy infrastructure construction project and/or electricity seller high and dry in future years.

According to its new coalition government agreement, Germany had planned to switch to the electricity market price + premium model, but not before 2017 and then “only if certain relevant pilot projects were successful.”

Spiegel.de said some members of the E.U. Commission felt Mr. Almunia’s “market premium” model was suitable for Europe, now, and some felt it may be suitable for countries in which the switch to renewable sources [Energiewende] is well-established but not for countries starting out on that path. In his draft guideline, which he’s trying to push through before the springtime election, he changed a definition that might make Germany’s success in this area an obstacle for member states attempting to replicate it: the definition of a mature technology was changed from a certain percentage of the electricity consumed by a country to a certain percentage of the electricity generated by the entire European Union. “Solar, wind (on land and sea), hydropower and biogas plants already exceed Mr. Almunia’s limit” in the E.U., Spiegel.de said, meaning that “in future they could only be supported [subventioned] by competitive bidding” even in countries just starting down that path, even in countries less wealthy than Germany.

In addition to creating a high impediment for countries in which technologies redefined as “market-mature” have not yet been built to competitive levels, Spiegel.de quoted opponents to the measure as arguing, this “direct marketing” model allegedly doesn’t work as promised. “Small electricity operators will need a marketer to sell their electricity,” and this marketer could go bankrupt, after which the operators couldn’t sell their electricity and would lose their right to a subvention [Förderung]. Banks would see the increased risk and raise interest rates on loans for constructing renewable energy sources. Building new renewable generators would become less attractive, meaning the market premium would have to go up for construction to occur: in the end, this model could prove more expensive than Germany’s current system (now being copied by over a dozen E.U. member states Spiegel.de said) while resulting in less construction of the new infrastructure.

(Nets ent GELT beh fry oong.)

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  1. Pingback: Spotmarkt | German WOTD

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