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RWE’s Renewables Unit Says German Grid Law Doesn’t Go Far Enough

RWE AG’s renewable energy unit said a new law designed to ease grid-connection delays for German wind farms doesn’t go far enough.

The law aims to spur investment in links to the grid by reducing risks for network operators, with utilities able to pass on costs exceeding caps to consumers through higher power bills.

“The new provision eases the pain but doesn’t heal it completely,” Hans Buenting, chief executive officer of RWE Innogy GmbH, said at a press conference in Essen today.

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 RWE AG and EON SE had threatened to halt investments unless the issues are resolved.

RWE Innogy said it still has to bear some of the costs associated with delays as only 90 percent of the loss of production is compensated by the law and construction costs mount.

A grid link for the Nordsee Ost wind farm has been delayed to the middle of 2014 at the earliest from last year, Buenting said.

Once the foundation and substation are in place this year, it will cost the company 12 million euros ($16 million) a month minus damage payments until the wind farm starts to operate, according to Buenting. The result is that spending on the 295-megawatt wind park will exceed 1 billion euros from an initial 900 million euros.

RWE Innogy plans to take an investment decision on the 330-megawatt Innogy Nordsee 1 wind farm this year. Grid operator TenneT TSO GmbH has promised a grid link will be in place by February 2015, according to Buenting.

RWE’s target of earnings before interest and taxes of 500 million euros for 2014 is under review because of low power prices, Buenting said.

Last year’s Ebit measure is expected to match the 181 million euros recorded for the previous year.

For the first nine months of 2012, Ebit fell 12 percent from a year earlier on sales of 595 million euros.

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