The realisation of offshore wind park projects in Germany - political environment, legal framework and bankability implications (eBook)

Text Sample: Chapter 4.1.1.3, Protection of investors' confidence: As indicated above, the RE-Act (EEG) gives energy generated from renewable sources a preferential treatment compared to energy produced from conventional sources. A wise OWP operator or investor should therefore ask the question whether the German feed-in system is in line with existing EU regulation (e.g. the prohibition of state aid (Beihilfeverbot) and/or the principle of free movement of goods (Warenverkehrsfreiheit)). The answer is: Yes. The European Court of Justice decided that the German feed-in model to support the development of renewable energy does not violate applicable European law, which gives OWP investors the comfort that the content of the German RE-Act (EEG) cannot be questioned from a European law perspective. However, once the investment has been made, an OWP operator could still face the theoretical risk that the national legislator in Germany may subsequently adjust or amend the applicable feed-in system and that the resulting new regulation would have a negative effect on the economics of his project (the most obvious example would be the potential risk of a reduction of the applicable feed-in tariffs). In practice, such a risk is rather remote. German legal experts agree that OWP investors should be protected by the German legal system from subsequent adverse changes of the RE-Act (EEG) and can usually rely on the legal environment which was applicable when making their investment decision. Furthermore, the German legislator is very much aware of the fact that such a tremendous legal and/or financial risk would barely be acceptable for potential investors and accordingly would constrain the targeted strong expansion of the German renewable energy sector. Hence, OWP investors in Germany can rely on a very stable and supporting legal environment (protection of investors' confidence (Vertrauensschutz)) and should have enough legal certainty to invest in the German renewable energy sector and the offshore wind energy segment in particular. 4.1.1.4, Evaluation of German RE-Act (EEG): In his work, Mendonca has analysed different renewable energy support schemes worldwide as well as varying feed-in laws, and deduced general lessons and requirements for the effective implementation of a feed-in law. The main aspects are to set up a simple, flexible and transparent feed-in system, to guarantee grid connection and a fixed feed-in tariff which is high enough to ensure a profitable operation, to differentiate between different types of renewable energies, and finally to assure public support and acceptance. Indeed, the German RE-Act (EEG) considers all the aforementioned requirements for an effective feed-in law and thus provides investors in renewable energy projects in Germany an environment with high investment security and planning reliability. Furthermore, the German public has always supported the development of alternative and 'green' energies in the past and will do so even more after the nuclear accident at the Fukushima power plant in Japan. If well-designed and implemented, a feed-in model like the German RE-Act (EEG) has proven to be the most effective and successful instrument to support and accelerate the development of renewable energies. A positive development of renewable energies can usually be achieved much faster and cheaper compared to alternative models like the UK quota model. The German feed-in law is one of the most successful in the world. Similar feed-in systems have been introduced subsequently in many other countries in Europe, but also in countries outside Europe like India or China.