* New grids seen as crucial for renewable energy switch
* Opponents say power lines destroy landscape, devalue
* Bavarian state premier revokes support for grid expansion
* Lingering dispute creates uncertainty for companies
By Michael Nienaber
PEGNITZ, Germany, June 3 Nestled in the hills of
northern Bavaria, residents of Pegnitz once enthusiastically
embraced Germany's green energy programme. Now they are pushing
back, upset that high voltage cables and pylons are planned
across their tiny town.
It is a crucial phase in Chancellor Angela Merkel's
"Energiewende", or shift from nuclear power and fossil fuels
towards renewable energy sources -- a policy that has put
Germany on the map as a leader on green issues before a G7
meeting on June 7-8 and a climate summit at the end of the year.
But the resistance is developing into a major headache for
Merkel. It is dividing her coalition, undermining her most
ambitious domestic policy, creating uncertainty for some of
Germany's biggest companies, and threatening the goal of
producing nearly half of all power from renewable sources by
2025 while remaining Europe's economic powerhouse.
One of three main power lines carrying wind power from the
breezy north to the industrial south would cut through Pegnitz.
Many of its 14,000 residents worry that it will destroy the
landscape, devalue property and bring unknown health risks.
"We are absolutely in favour of the Energiewende, but the
power lines are the wrong way to implement it," Uwe Raab, the
mayor of Pegnitz told Reuters. "The people in Pegnitz are
frightened and upset."
The issue is likely to come to a head in the next few weeks
as the government has set a deadline of the end of June or start
of July to reach agreement on the routes.
Until recently, Germans broadly supported the Energiewende,
especially the lucrative returns they could make by putting
solar panels on their roofs.
Because solar output is subsidised at above-market prices,
citizens in sunny Bavaria with its high proportion of detached
housing have cashed in.
But the side-effects of importing wind power from the north
are giving them second thoughts.
Some argue that the grid expansion would actually undermine
the shift to renewables since the new lines will also carry
"dirty energy" from coal-fired plants in eastern Germany to
Bavaria and even nuclear power from other countries.
Opponents also point to possible health risks.
"Studies suggest there could be a link between power lines
and cancer," says Markus Bieswanger, leader of a protest group
in the town. While there is no clear evidence of this, the
uncertainty is enough to unsettle the public.
For a graphic, click on: link.reuters.com/veg84w
Other towns are also in revolt. Since the federal network
agency presented its master plan to build the three high-voltage
direct-current transmission lines from north to south, protest
groups have formed across the country.
The conflict has escalated since the combative premier of
Bavaria, Horst Seehofer, head of Merkel's sister party, the
Christian Social Union (CSU), bowed to public concern and
publicly revoked his support for the grid expansion.
Seehofer suggested Bavaria could cope without new lines by
building up its gas-fired power capacity for the time when
nuclear plants in the south are switched off in 2022 - a
deadline set after the 2011 Fukushima disaster in Japan.
But in the current electricity market, gas-fired plants are
no longer profitable. They could only stay on stand-by if Berlin
subsidised them - an option so far rejected by Economy Minister
Sigmar Gabriel, head of Merkel's junior coalition partner, the
Social Democrats (SPD).
So the governing coalition has delayed a decision on whether
to go ahead with the three power lines several times, creating
uncertainty for the economy and Merkel's grand project -- just
as it has also delayed a plan to reduce emissions from coal
plants under pressure from miners and industry.
Germany's Chamber of Industry and Commerce has warned that
without new lines, the power grid could become the Achilles'
heel of the energy transition since delays could lead to
bottlenecks and electricity shortages.
Gabriel has warned that the German power market could be
divided into two price zones if the lines are not built with
power-hungry companies in the south such as Siemens,
BMW and Wacker Chemie forced to pay more for
electricity than firms in the north.
This could make Bavaria less attractive as an investment
location, even convincing some firms to leave the region.
The grid operators say there is no time to lose. "The
timetable is already ambitious," said Ulrike Hoerchens,
spokeswoman of Tennet IPO-TTH.AS, which is devoting resources
to informing residents and addressing "unjustified fears".
Underground cabling and modernising existing pylons could be
a solution at least in some areas, the net operators say.
But Raab, the mayor, remains sceptical. He fears that
protests could turn violent as was the case in the Bavarian town
of Wackersdorf in the 1980s. Back then, citizens prevented the
construction of a nuclear reprocessing plant. During clashes
with police, hundreds of people were hurt and some even killed.
"The people tell me: If these power lines are built, the net
operators should prepare themselves for another Wackersdorf",
(Additional reporting by Caroline Copley in Berlin and Vera
Eckert in Frankfurt; Editing by Noah Barkin and Anna Willard)