* New grids seen as crucial for renewable energy switch
* Opponents say power lines destroy landscape, devalue property
* Bavarian state premier revokes support for grid expansion
* Lingering dispute creates uncertainty for companies
By Michael Nienaber
PEGNITZ, Germany, June 3 (Reuters) - 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”, Raab said. (Additional reporting by Caroline Copley in Berlin and Vera Eckert in Frankfurt; Editing by Noah Barkin and Anna Willard)