On Wednesday 28 August 2012, the German government approved a draft bill which defines liability for offshore wind connections (the “Bill”). The Bill has been long-awaited due to disruptions that have been experienced by the offshore wind sector in Germany in recent times.
Who is liable?
It has been widely reported that clarity on apportionment of liability for offshore cabling risk from the German government has been needed. Significant delays for connecting offshore projects to the grid have been threatened due to cable shortage, resulting in significant cost overruns and undermined investor confidence in offshore wind. Due to a lack of legislation, it has not been clear who is responsible for the delays, which has made apportioning liability a long process.
Stefan Wesselink of TenneT is quoted as saying: “Liability should be insurable, but in order for this, it needs to be clear as to who is responsible for what part of the offshore grid...The alternative option is that the risk is socialised - by costing risk into the tariff paid by end users”.
Due to these issues, by way of example, the Bill aims to do the following:
- provide for compensation to be paid to parties adversely affected by delays in connecting offshore wind projects to the grid
- ensure that grid operators and windfarm developers work together
- allow for consumers to be charged an additional amount on their electricity bills in the event that windfarm owners are unable to sell electricity generated by offshore windfarms as a result of connectivity delays
- provide for more scope for grid operators to determine connection dates.
The Bill is anticipated to come into effect before the end of this year, and is expected to be reviewed in three years’ time.
Whilst the Bill has been widely welcomed and is seen as progress towards securing increased investment in the German offshore wind sector, it is considered that additional steps will need to be taken in order to achieve further growth.