Government Adopts Amendment of German Energy Act to Speed up Offshore Wind Power Expansion

The federal government today agreed on a bill that shall help to accelerate the construction and grid connection of offshore wind farms. According to the bill, transmission system operators (TSO) may under certain conditions pass compensation payments for grid connection delays and disruptions of power lines that they owe to wind park operators on to the electricity consumers.

1. New liquidated damages regime

In line with a previously published key point paper by the competent ministries, the bill stipulates that an operational offshore wind farm shall in principle receive liquidated damages of 90% of the applicable feed-in tariff pursuant to the Renewable Energy Sources Act (EEG). In case of a grid connection delay or a prolonged disruption of a power line, this shall apply from the 11th day of continuous non-input of power or from the 19th day if the input is interrupted due to several individual interruptions totaling more than 18 days in each calendar year. Under certain conditions (see new Section 17e para. 2 last sent.) damages for grid connection delays can also be claimed by wind farms for which currently grid connection delays are anticipated.

2. Damages reallocation scheme

If the damages payable by the TSO under the new provisions are due to negligance, they can be passed on to the other TSOs (and ultimately the consumers) in a staggered manner described below, except for the following deductibles, which have to be borne by the respective TSO (new Section 17f para. 2 EnWG):

  • 20% of the damages up to EUR 200 million per calendar year,
  • 15% for damages exceeding EUR 200 million up to EUR 400 million per calendar year,
  • 10% for damages exceeding 400 million up to EUR 600 million per calendar year;
  • 5% for damages exceeding EUR 600 million up to EUR 800 million per calendar year.

Damages exceeding EUR 800 million per calendar year can be passed on completely in case of negligence.

The new Section 17g limits the liability of the TSO responsible for grid connection for material damage to offshore installations, which were not caused due to intentional misconduct to EUR 100 million for each incident.

Damages paid by the TSO can be passed on to consumers depending on the degree of fault, with the exception of cases of intentional wrongdoing. TSOs are obliged to undertake all possible and reasonable measures to prevent situations leading to damages, to remove the cause for damage and prevent or minimise further damage.

3. Reallocation limits

A critical discussion of the original proposal as well as an intervention by Federal Minister of Consumer Protection Ilse Aigner lead to some modifications to the original draft, including a cap on how much of the the costs can be passed on annually as part of the grid charges to consumers. The burden sharing provision includes a cap of 0.25 ct/kWh (in the new Section 17f(5)(2) EnWG). Special rules apply for consumption above 1 million kWh, limiting payments to 0.05 ct/kWh, and for enterprises consuming more than 1,000,00 kWh (Section 17f(5)(3) EnWG).

Given the above limitation, a private household consisting of four persons with an average consumption of 3,500 kWh annually would be faced with additional costs of EUR 8.75 per year, while a business consuming 10,000 kWh per year would have to pay an additional EUR 25 and a small industrial enterprise consuming 50,000 per year EUR 125, the government points out.

4. Transparency and revision

Incidents leading to damages and countermeasures have to be documented and published on the internet by the TSOs. An evaluation of the provisions shall take place after a period of three years.

5. Offshore grid development plan

Apart from the new liability regime, the EnWG amendment intends to achieve a better coordination between the construction of offshore wind farms and the necessary grid connection and grid expansion. To this end TSOs shall be obliged to present an annual offshore grid development plan starting 3 March 2013. The plan shall set out the necessary measures for enhancement and expansion of the offshore grid connections that meet the demand, are cost-efficient and ensure the safe and reliable operation of the grid (Section 17b para. 1 EnWG new).

The individual right to grid connection under the currently applicable EnWG will be replaced by the right to a non-discriminatory allocation of capacity as of the date of completion of a grid connection (Section 17d para. 3 EnWG new). A grandfathering rule regarding the currently applicable individual right to grid connection applies (proposed new Section 118 para. 12 EnWG). The TSO responsible for grid connection has to inform about the expected date of completion of a grid connection. 30 months before the anticipated completion the announced date of completion becomes binding (Section 17e para. 2 sent. 3). This is important for the above described new liability regime.

6. Further legislative procedure

The amending bill will now have to undergo the legislative procedure, i.e. it has to be submitted to the Federal Council (Bundesrat) and Parliament (Bundestag).

According to the competent ministries (BMWi and BMU), the amendment is scheduled for entry into force this year.

[updated]

Source: Federal Government

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