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As expected, wind development in Austria ground to a halt in the second half of 2006 after the introduction of a controversial new eco-electricity law which limits support for renewable energy. While 75 turbines totalling 146 MW went up the first six months of the year, bringing Austria's cumulative capacity to 965 MW from 607 machines, nothing was installed after June. All of the new capacity last year was permitted before the end of 2004, meeting the deadline under the previous eco-electricity law for securing a standard offer priced contract lasting 13 years.

Under the new law, support for renewable energy is restricted to EUR 17 million a year to 2010, with wind only eligible for 30% of this pot, effectively limiting new wind capacity to around 70 MW a year, says Stefan Moidl of the Austrian wind energy association. "In the global market, an annual 70 MW does not make Austria terribly attractive as a market for turbine manufacturers."

The law has other drawbacks. Wind developers must apply for support to the new authority Abwicklungsstelle für Ökostrom (Oemag) on a first-come, first-served basis and only after projects have gained all necessary planning or building permits. Failure to be accepted in one year keeps them on the list of applicants for the next year, but thereafter applications must be resubmitted. Moreover, the price to be paid for the electricity generated is set year by year, with the only certainty being prices will fall.

The price for projects approved by Oemag in 2006 was set in October at EUR 0.0765/kWh, while for those approved this year the price is EUR 0.0755/kWh. Once projects reach their eleventh year of operation 75% of the fixed price is paid, then 50% in the twelfth year, or the market price if this is higher. Beyond that, wind plant operators get the "market price" as defined by energy regulator E-Control, minus wind energy balancing costs which could amount to some EUR 0.012/kWh. There is no pressure on E-Control to keep the balancing costs low, says Moidl. "Even older wind turbines that will reach their thirteenth year of operation within about two years will be hit by this new ruling."

Under current policy, Austria is unlikely to meet the renewables target of 78.1% of electricity consumption from green energy by 2010, as set by the European Commission (EC), Moidl says, let alone the government's own 80% by 2010 target. The EC agrees and has initiated infringement proceedings against Austria for lack of progress in correct transposition and implementation of the EC renewables directive.