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The German government's proposal for liberalisation of its electricity market was finally put before parliament for a first reading on April 18. After a long drawn out battle between the economic and environment ministries, the proposal was accompanied by a joint statement drawing attention to the various environmental clauses now included in the draft law. Environment compatibility is one of three main aims of the proposal, along with security of supply and fair electricity pricing.

But the main thrust of the legislation is to eliminate the monopoly supply areas of the utilities and introduce competition to electricity supply right down to the last light bulb. Both ministries agree that market transparency and easier access to the grid will improve the market chances for renewables. Of most note for wind energy is the government's intention to retain and "develop" the Electricity Feed Law (EFL) as separate legislation within a new competitive landscape. The law obliges utilities to buy all electricity from renewable sources at a premium rate.

The EFL, however, is still attracting the unwanted attention of economy minister Günter Rexrodt. He would like to see a cap placed on the amount of renewable energy for which a premium price is paid and prevent offshore wind energy from being governed by the EFL. It is issues such as these which are likely to form the subject of debate over the next several months. Second and third readings are due in parliament later this year.

Renewables friendly

Meantime, thanks to the untiring efforts of environment minister Angela Merkel, the liberalisation proposal is a deal more renewables friendly than Rexrodt would have liked. Merkel has consistently confounded Rexrodt's efforts to marginalise renewables, forcing the proposal back into the bowels of the economy ministry for amendments on more than one occasion. In the autumn it was finally approved by the cabinet (“uåX˜äŠÊ˜·³Ç, December 1996), only to be given a thorough drubbing by the Upper House in December. More amendments followed, including several from the environment ministry.

Merkel succeeded in achieving a status of "special significance" for use of combined heat and power and renewable energies. Until now the official definition of environmental compatibility has focused on energy saving and rational use of energy.

Special provision

A second point of agreement between the ministries is retention of the government's goal to have reduced C02 emissions by 25% in 2005, compared with the level of emissions in 1990. Furthermore, achievement of this aim is recognised as requiring "all possible efforts for greater use of combined heat and power and renewable energies in power generation." Since latest government figures on emissions suggest these increased in Germany by as much as 5% in the east, it seems this clause is on sure footing.

Merkel's third main achievement was wording in the proposal requiring the government to "give priority to the electricity industry's own efforts to raise the share of combined heat and power and renewable energies." Furthermore, the government will continuously monitor the share renewables have in electricity supply and must publish the results.

"The electricity industry has already agreed to co-operate. This route of voluntary commitments is to be anchored in the Electricity Feed Law. After discussions with all groupings involved, it should be possible to outline goals to be achieved within a reasonable period," says the joint statement of the ministries. The government also "reserves the right to introduce further legislative measures" if deficits in fulfilling the quotas emerge.

Although it would seem the government is anxious to provide some form of market protection for renewables, the utility sector is showing no signs of compliance. Last month the chairman of Germany's second largest utility, Preussenelektra, publicly stated that he saw no need for the further promotion of renewables. "Few utilities do more than we do. In 1996, we spent DEM 230 million on renewables due to the Electricity Feed Law," he calmly stated.

Time is now running out for the German utility sector's monopoly hold on the market, however. After merely watching the liberalisation of other European electricity markets, the pressure is now on Germany to catch up. The European Directive on Electricity agreed by the heads of European governments came into force on January 19. By February 19, 1999, all EU countries must have legislation in place to comply with the Directive. Its aim is to introduce Europe-wide competition in electricity supply.