Seminar on Allocation Rules for German Offshore Grid Capacities

On 25 March 2014 I gave a presentation on rules for the allocation and transfer of German offshore grid capacity. This included an outline of the current legal regime as well as an initial preview of the changes planned in connection with the ongoing 2014 revision of the German Renewable Energy Sources Act (EEG).

The presentation was part of a (German language) seminar series on German offshore wind issues in the Hamburg office of my firm Bird & Bird.

Since the revision effective 28 December 2012, Section 17d para. 3 sent. 1 EnWG provides that an operator of an offshore (wind) installation who is in possession of an offshore permit shall have a right to grid connection within the capacity allocated by the Federal Network Agency (BNetzA) in consultation (im Benehmen) with the Federal Agency for Maritime Shipping and Hydrography (BSH). The capacity shall be allocated in a non-discriminatory procedure, and shall be granted as of the binding date for completion of the connecting power line (verbindlicher Zeitpunkt der Fertigstellung der Anbindungsleitung) in the sense of Section 17d para. 2 sent. 3 EnWG. This scheme is intended to allow for grid connection that is demand-oriented and provides for an optimization and expansion of the offshore grid in line with the offshore grid development plan, which the transmission grid operators have to submit every year (cf. Section 17b EnWG) based on the Federal Offshore Plan drawn up by BSH.

The above December 2012 provision replaced the previous obligation by the transmission system operators set out in former Section 17 para. 2a sent. 1 EnWG to connect offshore installations as of the date of the technical readiness for operation of the offshore installations. Hence, a major change took place from an obligation by the transmission system operators to connect offshore plants when they were technically ready for operation to a right to grid connection limited by the capacity allocated by BNetzA and BSH in a non-discriminatory way.

As part of the currently discussed 2014 reform of the EEG the government wants to curb costs for the support of renewable energy sources from an average financial support across all technologies of 17 ct/kWh under the currently applicable EEG to 12 ct/kWh for new installations by 2015. Concerning offshore wind power, the national targets shall be reduced from 10 MW to 6.5 GW by 2020 and from 25 GW to 15 GW by 2030. To enforce the cap, the ministerial draft bill suggest to change Section 17d para. 3 EnWG as follows:

“Grid connection capacity on connecting power lines will be allocated by the Regulation Authority in cooperation with the Federal Agency for Maritime Shipping and Hydrography in an objective, transparent and non-discriminatory procedure. The maximum capacity to be allocated,  including all existing unconditional grid connection commitments, shall amount to 6.5 GW until 31 December 2020. As of 1 January 2021 allocatable capacity in the sense of sentence 2 shall rise by 800 MW annually. The Regulatory Authority can allocate grid connection capacity on condition of collateral clauses (Nebenbestimmungen) pursuant to Section 36 Administrative Procedure Act (Verwaltungsverfahrensgesetz).”

According to the proposed revision of Section 17d para. 4 sent. 1 EnWG, capacity shall be auctioned or allocated in another allocation procedure (pursuant to Section 17d para. 8 sent. 1 no. 3) if there is not enough capacity for allocation (pursuant to Section 17d para. 3 sent. 2 or 3) or if demand by offshore wind power plants included in the Federal Offshore Plan (pursuant to Section 17a para. 1 sent. 2 no. 1) exceeds the capacity of a commissioned power line. The provision further details the procedure in the following sentences.

The proposed revision of Section 17d para. 5 EnWG stipulates

 “In order to ensure an orderly and efficient use of offshore grid connecting power lines, the Regulatory Authority, in consultation with the Federal Agency for Maritime Shipping and Hydrography, may withdraw capacity from an operator of an offshore wind power plant, …, and to transfer it to another connecting power line, insofar as this does not contravene the provisions of the Federal Offshore Plan; for this purpose the Regulatory Authority can exempt free connection capacity on connecting power lines from allocation pursuant to Section 17d para. 3 sent. 1 EnWG (draft).”

The proposed revision gives BNetzA and BSH more power and may therefore have significant consequences for offshore power plant operators and investors. Besides, it raises various legal questions concerning the interpretation of the proposed new provisions.

Source: Bird & Bird Hamburg Offshore Seminar Series

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