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KfW may have to help fund offshore wind power-study

Germany’s development bank KfW and its electricity consumers may have to bear some of the costs connected to the expansion of offshore wind parks, according to a government task-force paper obtained by Reuters.

Germany plans to install about 7,600 MW in offshore capacity by 2020 and 25,000 MW by 2030.

This plan is off to a slow start, howver, due to regulatory uncertainty. New regulation of wind parks is expected to be in place by the summer, according to the task force.

The group, which includes Germany’s economy and environment ministries, grid and wind park operators and companies such as Siemens, was created by Berlin earlier this year to devise proposals on how to speed up the expansion of offshore wind power.

Legal liability risks pose one major problem in the expansion of offshore wind parks.

For instance, grid operators must compensate wind park operators if power lines break down, which is discouraging them from building connections to offshore parks. So investors in wind parks have no guarantee they will be able to sell their power.

“If possible damages cannot be economically insurable despite technological and organisational precautionary measures, the compensation needs to be nationalised (shared by all in the form of higher electricity bills),” the document drawn up by the task force said.

A further proposal by the group includes a stronger role for state-controlled KfW, which could fill in for overextended grid operators by helping cover the cost – either fully or partly – of network connections.

Wind power accounts for the greatest share of renewables in Germany’s energy mix at 7.6 percent. It had total generation capacity of 28,000 megawatts as of mid-2011, according to industry body BDEW.

Only a fraction of that capacity is offshore, about 200 MW by the end of 2011.

Several companies, including top German utilities E.ON and RWE, have warned that delays in the connection of wind parks to the grid could lead to the collapse of Germany’s offshore expansion plans.

E.ON said in February that the grid operated by Tennet would connect to the utility’s offshore Amrumbank wind park 15 months later than initially planned.

Germany’s Environment Ministry has said that to hit the country’s 2030 target, up to 1,500 MW must be installed per year – equivalent to one turbine per day during Germany’s fair weather season, which is about half of the year.

Sometimes built miles out to sea, offshore wind farms are seen as more efficient than onshore farms. They also face less resistance from residents who say they mar the landscape. (Writing by Christoph Steitz, editing by Jane Baird)