German industry group seeks green energy overhaul after election

BERLIN Thu Sep 19, 2013 6:46am EDT

Wind generators and the Niederaussem coal power plant of RWE Power, one of Europe's biggest electricity and gas companies, are reflected in the roof of a car in Rheidt, north-west of Cologne October 11, 2012. REUTERS/Wolfgang Rattay

Wind generators and the Niederaussem coal power plant of RWE Power, one of Europe's biggest electricity and gas companies, are reflected in the roof of a car in Rheidt, north-west of Cologne October 11, 2012.

Credit: Reuters/Wolfgang Rattay

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BERLIN (Reuters) - Germany's BDI industry association has proposed a plan for a radical overhaul of government policy on renewable energy after Sunday's elections, including scrapping the feed-in-tariff system.

The BDI has long warned that high energy prices, caused largely by the rising cost of incentives for green energy, threaten industry's competitiveness.

Chancellor Angela Merkel, expected to win a third term in the election although it is unclear who her coalition partner will be, has promised to revamp the subsidy system but has said she wants to keep some sort of incentives in place.

The reforms will be a top priority after the election.

"The discussion ... must focus on the question of how the power market should be structured to limit the costs of the expansion of renewable energy for consumers, to make possible its integration into the market and to safeguard supply," the BDI said in its paper, obtained by Reuters on Thursday.

Merkel's ambitious "green revolution" to wean Europe's biggest economy off nuclear power and fossil fuel is widely seen as her most significant domestic policy initiative. Around a quarter of Germany's power already comes from green sources.

The feed-in tariffs, which offer producers a long-term guaranteed price for the green power they inject into the grid, have led to a renewables boom but also to higher energy prices for consumers, who ultimately fund the subsidies.

The BDI proposed that only green technologies at an early stage of their development be eligible to receive a premium over the market price, implying that premium prices would be paid for a much shorter period of time.

To ensure security of supply at least in the short term, the BDI also suggested setting up a strategic reserve, which would create production capacity via an auction.

(Reporting by Madeline Chambers; editing by Jane Baird)

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