German Coalition to Lower Damages for Offshore Wind Delays

Germany’s ruling coalition agreed to lower a cap on damages that grid operators must pay for delays linking offshore wind farms to the network after the companies said they were unable to get insurance coverage for such risks.

The parties agreed in Berlin today to lower the ceiling on damages when grid companies are found negligent to 17.5 million euros ($23 million) from 100 million euros in an earlier draft energy bill, Joachim Pfeiffer, a lawmaker with the Christian Democratic Union, said today in an interview. Damages may be as high as 110 million euros if operators act with “gross negligence,” he said.

Developers have suffered delays in connecting farms to the grid as they seek to meet Germany’s target of 25 gigawatts of sea-based turbines by 2030 to help the country shift away from nuclear generation. Utilities including EON SE and RWE AG have threatened to halt investments unless the issues are resolved.

The lower cap comes after grid operator TenneT TSO GmbH said it was concerned “that a 100 million-euro cap greatly exceeds their yearly grid-connection profits and would dampen investment security,” Sophia von Waldow, an analyst with Bloomberg New Energy Finance, said today by e-mail.

EnbW Energie Baden-Wuerttemberg AG, the country’s third-biggest utility, this month postponed a decision to invest more than 1.5 billion euros in a North Sea wind farm because it wasn’t clear when the project could be connected to the grid.

Paying Damages

The original draft bill endorsed by Chancellor Angela Merkel’s Cabinet in August would have required power customers to pay as much as 0.25 euro cents a kilowatt-hour to cover costs for paying damages linked to grid delays, which would have generated about 600 million euros a year, von Waldow said. Consumers may have to shoulder a higher share of the burden now as costs are estimated at 1 billion euros and “this leaves a significant amount uncovered,” she said.

The bill will be presented to Germany’s parliament on Nov. 30, Pfeiffer said. Environment Minister Peter Altmaier said on Nov. 23 that he wanted to pass the energy bill before the end of the year to send a “signal of optimism” to the offshore wind industry.

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