Regulatory and policy options to encourage development of ...

MODULE 9: RENEWABLE ENERGY: REGULATORY AND POLICY OPTIONSpage 9.571. INTRODUCTIONGermany currently has more installed wind energy capacity than any other country.In late 2003, Germany had a total of 14000 MW of installed capacity (WPM, 2004).It has had a very rapid deployment rate, though this is now slowing as goodonshore sites become rarer. Before 1990 Germany had invested significant fundsin renewable energy R&D with little practical results. Since 1990, the use of particularfinancial mechanisms, most notably the long-term availability of a tariffmechanism, has seen the strong practical results indicated by the statistics forincreasing wind energy exploitation. Germany has employed a number of supportmechanisms in the last fifteen years, each of which has supported renewableenergy technologies including biomass, solar power, hydropower,geothermal energy and energy derived from landfill gas, sewage treatment andcoal-bed methane from coal mines (Federal Ministry for the Environment 2000).Different levels of compensation apply with regard to each technology. This casestudy will primarily deal with support mechanisms as they have applied to windenergy as this provides the best example of an applied policy engendering positiveresults.2. REGULATION IN GERMANYIt is worth noting that regulation in Germany has until recently relied upon interpretationof legislation by either the courts or by the Federal Cartel Office (FCO)—or both. A regulatory agency was established in 2004 but the full range of itspowers has not yet been brought to bear. The lack of a regulator has meant thatsupport mechanisms for RE have been subject to some drawn out court cases asutilities have tried to avoid costs.3. ELECTRICITY FEED-IN LAW 1991Germany’s first significant mechanism for encouraging wind energy exploitationcame with the introduction of the Stromeinspeisungsgesetz or Electricity Feed-InLaw (EFL) on 1 January 1991. This forced German distribution network operators(DNOs) to purchase all electricity offered to them from a range of renewablesources, with wind-generated electricity to be paid a price equal to 90 per centof the average price charged to end-users over the year. The price was paid by