• CDU lawmakers to challenge draft legislation in lower house
  • Lawmakers say auction plan won’t damp costs of clean power

German Chancellor Angela Merkel’s Cabinet backed a plan to roll out clean-energy auctions next year, prompting protests from her ruling party that said the initiative won’t do enough to slow down rising energy costs.

The inception of limited annual auctions of wind, solar and biomass power will replace guaranteed payments for clean energy generation and aims to slow down current rates of expansion of the technologies, according to the government. Critics from Merkel’s party of Christian Democrats say the auction volumes are too generous and that the power grid’s renewal won’t be able to keep pace with even more renewable energy. 

“Naturally it must become more market orientated,” Merkel said Wednesday in a speech to German utilities at their annual congress. “We can’t arbitrarily push up” power prices, she said.

Renewable energy has grown from a niche commodity to become Germany’s most important power source, said Merkel, adding that her government’s auctions will seek to pace renewable energy expansion at a rate in step with renewing the electrical grid.

Germany plans to auction 2.8 gigawatts of onshore wind power annually from 2017, a volume that includes replacing old wind farms with new turbines. The government also plans annual auctions of 150 megawatts of biomass power and 600 megawatts of utility-scale solar power. Offshore wind power will be sold in auctions from 2021, according to the draft legislation.

The scale of annual solar, wind and biomass auctions from 2017 are calibrated so that clean power as a share of all power generation won’t exceed 40 percent to 45 percent by 2025, Merkel said.

Clean energy accounted for 33 percent of the power mix last year, up from 27 percent in 2014, prompting Merkel’s Christian Democrat allies to demand a slower pace of growth.
Guaranteed fees paid on all clean power generation -- known as feed-in-tariffs -- added 23 billion euros ($25.7 billion) to retail power bills last year, helping make German electricity the second-most expensive in Europe after Denmark.

Lawmakers from the CDU and its sister Christian Social Union party are skeptical that grid building will keep pace with clean energy targets. CSU lawmaker Georg Nuesslein said the caucus will challenge the auction volumes in the lower house.

Merkel has sought to balance demands from within her parliamentary caucus for limits on renewables with pressure from the wind, solar and biomass industries and the states, which want more generous auctions of clean power. The compromise may hurt clean-power development while allowing the government a rein in expansion costs.

Criticisms of the plan may be premature, according to Bloomberg New Energy Finance analyst Janis Hoberg.

“The build-out of onshore wind capacity will slow down, regardless of the tender cap,” said Hoberg, citing auction volumes and plans in the draft bill to reduce wind park construction in areas where they’re causing grid congestion.

Germany added 1.3 gigawatts of new solar capacity last year amid a tapering of feed-in-tariffs. The government set a solar growth target for the year of 2.5 gigawatts.

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