Offshore wind power in Germany moving forward at last

Joint press release from members of the AG Betreiber operating cooperative (Stiftung Offshore Windenergie)

09.06.2011

The undersigned eight associations/institutions and AG Betreiber generally welcome the legislation proposed by the Federal Government on 6 June 2011, but at the same time see an urgent need for improvement on one essential point.

The new framework conditions contained in the drafts of the amendments to the Renewable Energy Law (REL) and the Energy Industry Act as well as the Grid Expansion Acceleration Act are generally welcomed and prepare the ground for the development of offshore wind energy in Germany. This also applies to the EUR 5 billion funding programme by the Development Loan Corporation (KfW), which has now been mobilised and which is intended to provide the basis for funding the first 10 offshore wind farms with generally 60 to 67% external finance (this is not a subsidy, but loan finance which has to be paid back to the KfW including interest at market rates).

The undersigned would like to stress the fact that this proposed amendment to the REL does not favour offshore wind energy compared to other renewable energy technologies. Compared to the 2009 REL, the only difference is that the so-called “sprinter bonus” has been included in the start-up payments. It is a fact that this step does not result in increased tariffs or additional costs to electricity customers. The undersigned are at pains to point out that they are not opposed to appropriate funding for onshore wind energy, which is another area in which the undersigning companies invest to a larger extent. For this reason, the agreement between the Prime Ministers and the Federal Government regarding an improvement of the funding conditions for onshore wind energy is also welcomed.

However, the associations and offshore operators are very concerned that the acceleration model proposed as an optional alternative to the previous funding period is not adequately reflected in the Federal Government’s draft amendment to the REL. The acceleration model has been developed in order to improve the commercial position of offshore projects through a shortened period of funding under the REL, without imposing additional charges on electricity customers.

However, with the tariff of 19 cents/kWh over a period of eight years proposed now, the total payments to offshore projects will be significantly reduced compared to the basic model of 15 cents/kWh over a period of 12 years. This will hardly serve to achieve the intended acceleration of the development of offshore wind energy exploitation in Germany. It means that commercial uptake of offshore wind energy exploitation and achievement of the Federal Government targets (10 GW by 2020) are put into question.

The 2010 KPMG market study “Offshore wind farms in Europe” (www.kpmg.de/Themen/1149.htm) documents that there is an imbalance between the profitability and the risk profile of offshore wind farms in Germany. The potential returns in other competitor markets in Europe are significantly higher. In addition, the development of offshore wind energy in Germany is subject to comparatively high risk due to the special site conditions (water depth, distance from the coast, network connection). It is all the more important therefore to compensate for this disadvantage, at least in part, with the acceleration model.

The partial report on wind energy in support of the 2011 REL field report commissioned by the Federal Environment Ministry (www.bmu.de/erneuerbareenergien/downloades/doch/47459.php) considers nine years an appropriate term for an initial tariff of 19 cents/kWh.

The above reports confirm that an accelerated period of nine years with a tariff of 19.5 cents/kWh demanded by the offshore wind power industry would be the right step forward.

For this reason the associations and institutions, as well as the companies listed, which have to make important investment decisions, urgently appeal to the members of the German Bundestag to modify § 31 para. 3 sentence 1 of the government’s REL proposal to the effect that the operator of the plant will receive an increased initial payment of 19.5 cents per kilowatt hour (instead of 19.0 cents/kWh) over an initial period of nine years from commissioning (instead of an initial period of eight years). This would not result in additional costs to electricity customers over the total funding period but could even potentially lead to lower electricity prices due to the faster integration of offshore wind energy into the electricity market.

The enclosed excerpt from the statement by the associations/institutions dated 20 May 2011 on the ministerial draft for a 2012 REL, and the letter from the AG Betreiber/Stiftung Offshore Windenergie to the Federal Environment Ministry dated 25 May 2011 contain detailed reasoning.

Hamburg, 9 June 2011

Stiftung Offshore Windenergie
Offshore Forum Windenergie GbR
Windenergie-Agentur Bremerhaven/Bremen e.V.
VDMA Power Systems
Wind Energy Network Rostock e.V.
Wirtschaftsverband Windkraftwerke e.V.
windcomm schleswig-holstein e.V.
Verein zur Förderung des Clusters Erneuerbare Energien Hamburg e.V.
AG Betreiber (Stiftung Offshore Windenergie)

Jörg Kuhbier, Stiftung Offshore Windenergie
Tel: +49.40.34 10 69 0
Email: kuhbier@kuhbier.com

Dr. Jörg Buddenberg, AG Betreiber
Tel: +49.4488.5232100
Email: joerg.buddenberg@ewe.de

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