Coronavirus-induced power price drop prompts calls for extending Germany's renewables support
Clean Energy Wire
The price drop on electricity markets due to the coronavirus pandemic has led to calls for extending Germany's renewable energy support for wind turbines that are poised to fall out of the scheme in 2021, as low power prices mean many installations can no longer be operated at a profit and would have to be decommissioned. The government of Lower Saxony, Germany's biggest wind power state, has launched an initiative in the council of federal states (Bundesrat) that calls for a "safety net" in the form of continued support payments for wind turbines, first reported by the Süddeutsche Zeitung. The payments should be granted to turbines reaching the end of their 20-year guaranteed support period next year and which cannot be easily replaced in order to prevent a decrease in the country's total renewable power capacity. "This safety net should be akin to long-term power provision contracts," the state's government writes, arguing that turbine operators should have a "one-off" option to sell their power to grid operators at a fixed price. It proposes a fixed remuneration of about 4.4 eurocents per kilowatt hour (kWh) for a maximum of seven years, arguing that power customers, who pay the surcharge with their power bill, would not face higher costs as long as power prices for onshore wind remain above the fixed remuneration.
Energy provider Naturstrom says about 5,000 onshore turbines with a total capacity of 3.7 gigawatts (GW) are at risk of being taken offline next year. "Due to the coronavirus-induced crash on electricity markets, the operation of installations is hardly economically viable even at the most ideal locations," the company says. Naturstrom therefore calls for a "temporary backstop" to avoid a decrease in the country's renewable power capacity under which operators for two years continue to receive "a fraction" of the support payments they were entitled to so far, on average 3.2 ct/kWh hour. According to the company, this would be feasible at a total cost of about 15 million euros. "Continued operation of fully functional old wind turbines is much cheaper than replacing them with power plants of any technology before their time," said Naturstrom board member Oliver Hummel.
The 20-year guaranteed remuneration was introduced in the year 2000 to facilitate the breakthrough of renewable energy sources by providing investors with safe returns. As the first installations reach the end of guaranteed support in 2021, operators have stated that they were looking for alternative ways of funding with so-called power purchase agreements (PPA), under which electricity is sold directly to grid operators or industrial customers at a fixed price. This is seen as a promising alternative to the decommissioning of thousands of functioning installations.