NEWS

RENEWABLES: Germans struggle to resolve new sources’ conflicts with electricity grid

05/28/2008

Jenny Mandel, ClimateWire reporter

BERLIN, Germany—In a plain office above the busy streets of Berlin, seven people are trying to make the path run smooth for renewables, easing the way as grid operators and regular citizens learn to work together in new ways.

Set up in the fall of last year, the Clearingstelle EEG, or Renewable Energy Sources Act Clearinghouse, is a quasi-legal group set up by the German environment ministry to mediate disputes that arise as people take advantage of generous supports for clean power from a wide range of sources.

The organization aims to help individual citizens and other small power producers clear the hurdles to selling power into their local electricity grid. In the United States, such challenges, thrown up by well-meaning bureaucrats and wary utilities, have slowed and stopped many early adopters seeking to bring clean power online.

A German home with both solar-heated water and solar-powered electricity. Photo courtesy of BSW-Solar/Viessmann.

Under German law, anyone who has a supply of renewable energy is allowed to feed it into the national electric grid. Grid operators are required to connect renewable energy plants "with priority" and to transmit those electrons upon connection, paying plant owners handsome per-kilowatt rates that are hand-tuned to support different technologies at the level each requires to stay afloat.

The concept is to help new solutions past the early stages of competition, where poor economies of scale can disqualify promising ideas. But the law’s relatively simple design masks the complicated legal and financial realities of blending a multitude of instruments and musicians into a single, coherent symphony.

When discord arises, the parties can bring their disputes to the clearinghouse. There, three lawyers work with a legal researcher, an industrial engineer and two support staff to resolve the issue.

A central goal for the clearinghouse is to take care of disputes quickly and on the cheap. Cases are completed in six months or less and, as legal researcher Martin Winkler puts it, "There’s no cost here. Just stamps for the letters."

German lawyers grapple with a tangle of wires and rules

The clearinghouse offers a few options for warring parties.

The first level of help is a "conciliation action," basically a fully confidential, nonbinding mediation in which both sides talk through the dispute in hope of negotiating an agreement.

At the next level up, the two parties present their arguments, and the clearinghouse’s three lawyers assess the facts and legal questions and anonymously vote on which side should prevail. The process is less formal than a court proceeding and nonbinding unless agreed otherwise in advance, but offers a court-like review that the parties might accept for its neutrality and legal grounding.

This "vote action" is by far the most popular option, which Soenke Dibbern, the clearinghouse’s industrial engineer, attributes to its easy parallel to a court hearing. In the 10 to 15 cases addressed this way since the service started last fall, about half the parties have brought outside lawyers, Dibbern said, but the costs come out to far less than what it would cost to go before a judge, where a case would take long hours to prepare and possibly years to resolve.

A third option, a "recommendation action," allows the group’s lawyers to publish an opinion on abstract questions that crop up frequently. Those can be developed with the input of up to two interest groups, and other parties can file statements to accompany the opinion.

The questions that show up at the clearinghouse present a challenging blend of technical and legal issues, the staff says. For example, under the law, costs associated with "coupling" renewables to the electric system must be born by the grid operator, while those stemming from "extension" of the grid to the system fall on the would-be supplier. Determining where that line should be drawn for a particular project can require the inputs of both lawyers and engineers.

FERC seeks help from ‘technical masters’

In the United States, the laws around grid interconnection are not nearly so simple as in Germany, rendering dispute resolution exponentially more complex. Different states have different legal requirements, and system owners often have to work with multiple state agencies. Individual utilities have their own rules, too, and some are friendlier than others to the idea that customers can also be suppliers.

One organization that works to harmonize rules and regulations is the Interstate Renewable Energy Council. Jason Keyes, who works on state interconnection laws for the group, said depending on the dollars at stake, a dispute can easily derail a whole project.

Most states have a dispute procedure that goes through the utility commission or to arbitration or mediation, he said, but a minor technical question can take weeks or months to resolve. "Without a fast and inexpensive dispute resolution procedure, the customer may choose to pay ... rather than delay her project. For more significant disputes, the customer may chose to abandon the project rather than dealing with the cost, delay and risk of the dispute resolution process," he explained.

IREC has developed model interconnection rules that address dispute resolution by letting the state public utilities commission designate a "technical master" empowered to make binding decisions. That code has not been widely adopted, though, and Keyes thinks a better idea could be to appoint such an arbiter, but give the losing party rights to further review of the case.

The Federal Energy Regulatory Commission also has a dispute resolution service, through which parties can either work directly with an agency staff member to work through an issue or get help in identifying another neutral third party. FERC’s service is also nonbinding, but Keyes did not know of a single installer or developer who had consulted the group. "One major developer told me that the need to go to dispute resolution would typically scrap a project—margins are thin enough that it isn’t worth the cost, the delay and the risk of a poor resolution," he said.

Going to court, of course, costs even more.

Mediation gets mixed up with meditation

At the clearinghouse in Berlin, Winkler, the legal researcher, notes the irony of Germans taking up alternative dispute resolution while Americans largely leave it on the table. "The whole ADR discussion came from the U.S.," he said, while in Germany the strategy remains confined largely to family law. "Mediation they mix up with meditation," he say. "People know the court, they like the court."

One factor that may help the group, at least for now, is that published decisions do not contribute directly to legal precedent. Winkler says a major goal in establishing the forum was to work through the issues around grid interconnection in an environment where not only the letter of the law but its spirit would be considered.

Because the system does not legally set precedent, there is a bit more flexibility and room for goodwill. Dibbern, the engineer, said that although individual courts differ, suggestions that the highest civil court may have a very slight preference for individual plant operators may also make utilities more willing to resolve their issues amicably.

Funding for the clearinghouse runs through the end of 2009, and Winkler and his colleagues shift uncomfortably when asked what will happen after that. One option could be to apply the published opinions and decisions of the group to fine-tune the renewables law. Another would be to seek continued funding for their current role, which would require public consideration and budgetary approval.

The question may depend in part on how much trust they can build up during that time among constituents. So far, individuals seem very comfortable with the clearinghouse model, the staff says, but grid operator reactions are mixed. Some see the group as a branch of the environment ministry that formed it and appointed the staff, hopelessly weighted toward the renewables side. Other utilities have been quick to bring problems before the group for resolution.

Dibbern noted that even some renewable energy lobbying groups have taken issue with the group, possibly out of concern that their roles overlap. To the staff, the importance of neutrality is obvious. "This is tricky; we can’t just act on our guts," he said.