The electricity transmission system operator (TSO) at the centre of the cabling crisis that risks delaying development of Germany’s offshore wind industry, TenneT, has had its certification withheld by German energy regulator, Bundesnetzagentur (BNA).
Certification has been denied on the grounds that TenneT has insufficient financial means to fulfil its legal obligations for network operation and expansion.
TenneT acknowledges that its problems are due to the demands of a network expansion programme designed to connect offshore wind stations in German waters with the mainland grid.
The company owns and operates about 40% of Germany’s high voltage electricity network, covering a broad corridor that runs the length of the country from the Danish border in the north to the Swiss, Austrian and Czech borders in the south. In addition to its onshore commitments, it is legally obliged to connect offshore wind stations when these are ready for commissioning.
Despite the fact that 70% of these offshore costs are rolled over to Germany's three other TSOs, TenneT has been struggling to shoulder the cost of initial investments. It needs to attract additional investment, but this has been made more difficult because of the risk that it will have to pay damages to offshore wind operators if cable connections are not ready in time or if outages occur after they are commissioned.
An agreement signed earlier this year with Mitsubishi, under which the Japanese company will provide 20% of the investment in four offshore cables, will only take effect when these liability issues have been resolved.
Without certification TenneT risks incurring financial penalty. It has another chance to demonstrate its financial capability at a later stage in the certification procedure.
This is likely to be in about four months’ time, after the European Commission has had two months in which to comment on BNA's draft decision. After this, BNA has another two months to reach a final decision.
Responding to BNA’s draft verdict, TenneT said "it confirms the necessity for a sustainable financial solution for offshore cable connections in the North Sea." In late 2011, the company publicly warned the German government about problems with financing and building the offshore cable infrastructure.
There have been rumours that TenneT’s parent, the Dutch state-owned TenneT Group, might have stepped in to help, were it not for upcoming elections in the Netherlands on 12 September. For now, its subsidiary is pinning its hopes on the German federal economy and environment ministries' recently-published plan for overcoming offshore cable liability issues, published early this month. Draft legislation to turn this plan into law is expected next month
Another German TSO, Amprion, would like a solution to questions of cable liability. "We support the moves to reduce the risks of offshore cables to match those of onshore cables," an Amprion spokesperson told “uåX˜äŠÊ˜·³Ç Offshore. "After all, the TSO must build the cables regardless of its own risk analysis and views on whether the project is sensible."
50Hertz, the TSO responsible for offshore cables to wind stations in the German Baltic Sea, is broadly supportive of the government’s plan, but not in favour of a suggestion from TenneT to create a joint offshore cable or a high voltage direct current (HVDC) cable company.
Others argue that the government’s plan provides far too much protection to offshore wind station operators and to TSOs. TSOs would only be fully liable under "wilful act" circumstances. Even in the case of gross negligence, a TSO would be able to roll over 80% of damages payable to an offshore wind operator onto electricity consumers. In addition, the government’s plan includes a cap of €20 million per incident and €60 million per year on the damages for which a TSO would be solely liable.
The whole thing is a contract to the detriment of third parties," according to Robert Busch, managing director of a federation of new energy companies, BNE (Bundesverband Neuer Energieanbieter).
Thus far, TenneT has built two offshore cables in German waters and has initiated another seven. Combined, this work involves investment of almost €6bn up to 2015, or around €1 billion per year. TenneT's revenue in Germany was €829m in 2011, on which it earned €152m. German revenue represented about half of TenneT Group's revenue last year of €1.5bn, with group operating profit at € 357m.
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