August 7, 2012 / 2:55 PM / 7 years ago

German utilities shun energy shift spend - study

* No money set aside to construct smart grids, poll finds

* These are needed for system integration of green power

* Companies also unwilling to build back-up power plants

By Vera Eckert

FRANKFURT, Aug 7 (Reuters) - German energy utilities have adopted a half-hearted approach to investment in power grid enhancement despite paying lip service to its necessity in the country’s intended strategy change, a consultant’s study showed on Tuesday.

Rising power influx from solar panels and wind turbines in the future - as Germany expands the sector dramatically and ditches nuclear energy - needs matching by the development of intelligent distribution at local level, known as smart grids.

Their job would be to integrate the arrival of green power from remote regions as well as feed back locally-produced power.

Local utility association VKU has estimated that the additional cost of information technology for the task could run into 7 billion euros ($8.7 billion) up to 2030.

Steria Mummert Consulting polled 100 decision-makers in local utility firms on business plans to 2014 to find that while three quarters were ready to build up their renewable power generation, only half wanted to spend any money on smart grids.

“The contradiction can be explained with the lack of specific support from policymakers for smart grid investments, which means they have to be funded from existing cash flows,” said Norbert Neumann, energy expert at Steria.

“There is a dearth of political models to create relevant incentives,” he added.

Another reason for caution among those questioned was that there will already be higher costs to be factored in for the newbuild of thousands of kilometres of new electricity lines by 2022, to carry more green power across the country.

The government presented a 32 billion euros ($39.7 billion)bill in May for building new high voltage networks and upgrading existing ones.

These costs will have to be recovered from higher network charges which will apply to all power consumers, including utilities.

Lumbered with these bills, especially small utility players will be loath to pay more upfront for smarter networks as well, Steria concluded.

The study also showed that only 30 percent of companies planned to spend money over the next three years on conventional capacity such as gas-to-power, which is badly needed as a back-up for volatile renewable supply.

They cited their unprofitability and lack of incentives.

More burdens than those already created by the energy transformation were expected from a wider shake-up of EU energy market regulations, where according to Steria only half of companies were so far planning internal activities to prepare for their implementation. ($1 = 0.8056 euros) (Reporting by Vera Eckert; editing by Keiron Henderson)

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