(Recasts with passing of law in parliament, adds utility input,
* Industry paid if agrees to go without power in emergencies
* Plant operators must signal intended plant closures
* Local utilities say power bills will run away
* Offshore wind liabilities curbed, may unlock investment
By Vera Eckert
FRANKFURT, Nov 29 Germany passed legislation
designed in part to help prevent blackouts as the country moves
towards relying on renewable energy and out of nuclear power.
Following the Fukushima disaster in Japan, Germany embarked
on a costly retreat from nuclear and an expansion of green power
sources such as solar and wind, but this is placing strains on
the grid because such renewable sources are intermittent.
To encourage generator and grid operators to adapt to this
unpredictable new energy mix, the government is therefore
creating a complex system of rules and incentives designed to
keep power flowing regardless of the weather.
The policy response has global significance since
policymakers and utility investors worldwide are watching how
Germany masters the task of integrating green power.
Yet the new system has also brought criticism since the
costs are being passed on to consumers. T axes and feed-in
tariffs already double the cost of producing and transmitting
power in final bills.
Local utility association VKU warned the cost to consumers
was getting out of hand. "Without honest communication,
citizens will not know how many costs are coming their way,"
said VKU director Hans-Joachim Reck.
"They have a right to know the amount of money thy have to
pay for supporting renewables and the urgently necessary network
expansion," he added.
Yet the new law is needed given pressure on the grid.
A report this week warned the number of tight network
situations on power networks trebled last winter and was rising
this year, increasing the risk of leaving industry and
households out of power.
The legislation passed on Thursday specifies a system under
which grid operators should agree supply terms with big
Those consumers, who agree to be ready to curb their
consumption if power supply is disrupted in emergencies, will be
The additional capacity secured by this measure totals 3,000
megawatts (MW) - equivalent to three big coal-fired plants.
Companies such as aluminium smelters will get 20,000 euros
($25,820) a year per MW to agree to a potential switch-off and
between 100 and 500 euros per megawatt hour (MWh) they forego if
the crisis situation actually materialises.
In a second measure, operators of power plants must from
2013 notify authorities a year in advance if they plan to shut
installations. Should the energy regulator declare such plants
as "system relevant" it can demand they be kept open another
Operators would only be paid for covering running costs but
would be able to sell their power in the day-ahead market.
A third element of Thursday's package concerns the financial
liabilities that grid operators will have to pay if links to
offshore wind power parks, fa voured by the government, are
delayed. Again, costs will be passed on to consumers.
These liabilities were capped, a measure aimed at unlocking
stalled offshore wind projects after uncertainties over the
issue discouraged private investment and stopped utilities such
as EnBW, RWE and Denmark's Dong from raising
The legislation is also designed to deal with the key issue
that thermal power stations are still needed to plug gaps left
by renewables, yet revenues from such plants, especially older
gas-fired plants, have been hit by big renewable volumes making
an increasing contribution to supply.
This reduces the amount of time a relatively inefficient
plant might be operated, since green power is treated
preferentially and must be marketed whenever it is produced.
Utility E.ON has responded by abandoning thermal
plant projects and idling capacity.
Earlier this month, E.ON said it would shelve 1,000 MW of
capacity at Irsching 3 and Staudinger 4 and only run the two
blocks as reserves.
($1 = 0.7746 euros)
(Editing by David Holmes)