Citizen's Power Lines - a German example

With more and more wind farms being built in Northern Germany and PV plants being installed in Southern Germany the German decentralised electricity transmission grid requires huge investments in new long distance extra high voltage power lines (21 bn EUR onshore until 2023, 39 bn EUR offshore until 2033). At the same time such projects usually face fierce resistance from affected citizens and environmental NGOs. Therefore, the Federal Government, the Federal Regulator and the four German TSOs are working on concepts aiming at increasing acceptance of new power lines through financial incentives and at the same time raising funds for the investments.

In 2011 the Grid Charges Ordinance was amended allowing TSOs to pay to municipalities up to 40,000 EUR per km of new power lines crossing their territories and to take the relating cost into account when calculating grid charges.

In June 2013, the German TSO TenneT launched a new instrument for the financial participation of citizens in the extension of the German electricity grid. The 150 km long 380 kV West Coast Line in the federal state of Schleswig-Holstein, which shall help bringing power from offshore wind farms in the North Sea to Southern Germany, shall serve as a pilot project and become a “ВürgеrІеіtung” (Citizens' Line). Citizens may subscribe to bonds issued by TenneT and thereby contribute to the investment costs.

On June 14, 2013 Federal Environment Minister Peter Altmaier, the Prime Minister of Schleswig-Holstein, Torsten Albig, and Lex Hartmann, managing director of TenneT TSO introduced the new concept. Residents and property owners from the affected districts Dithmarschen and Nordfriesland may subscribe to bonds until the end of August 2013. The main features of the concept are as follows:

• The overall amount of the bond is 40 Mio. EUR which corresponds to 15% of the overall investment volume of the West Coast Line. The bond will be issued by TenneT's holding company TenneT Holding B.V. It will have no definite term. TenneT is not restricted to use the funds for investment into the West Coast Line.
• Contributions can start from 1,000 EUR as a minimum investment. Residents living within a distance of five kilometres from the future line will be preferred in acquiring bonds up to 10,000 EUR.
• The bonds are designed as hybrid subordinate bonds. During the planning and plan approval phase the interest rate will be 3%; from the actual start of the construction works on it will be 5%. The interest rate is not definite but will be linked to the regulated return on equity interest rate for electricity TSOs.

Even though residents and property owners are not deterred from filing actions against the planning, construction and operation permit by subscribing to the bond TenneT hopes to increase the citizens' acceptance of the West Coast Line by this possibility of financial participation. Up to now, 160,000 households have been informed about the opportunity. While early press article reported a high interest in subscribing more recent reports indicate that the interest may be lower than expected.

The concept is planned to be extended to other grid extension projects. In July 2013, the Federal Ministers for the Economy and the Environment, and representatives of the four German TSOs 50Hertz, Amprion, Transnet BW and TenneT signed a declaration according to which affected citizens shall be able to participate financially in grid extension projects in the future. Similar parameters as those for the West Coast Line shall apply. According to the declaration, an investment scheme will be elaborated and suitable projects will be identified.

Co-authors:
Dr. Fritz von Hammerstein, CMS Hasche Sigle, Germany
E [email protected]

Johanna Kemper, CMS Hasche Sigle, Germany
E [email protected]