03/24/2014, Berlin

"BDEW Treffpunkt Netze 2014" ("Focus on networks")

BDEW submits industry solution for the improvement of investment conditions for distribution networks and related areas

Unnecessary delays in network expansion should be eliminated

At the industry event, "Treffpunkt Netze 2014" on 25 and 26 March in Berlin, the German Association of Energy and Water Industries (BDEW) will present an industry solution for the improvement of investment conditions for distribution networks and related areas. This was announced by Roger Kohlmann, member of the BDEW General Executive Management Board, today: "The Energiewende and the expansion of renewable energies will only succeed if the necessary networks to transport the electricity are built.” The BDEW has already repeatedly pointed out that the investment conditions are problematic, in particular for distribution network operators. This leads to unnecessary delays in the urgently needed network expansion. We have created an industry solution which ensures that the investment backlog in relation to distribution networks can be dissolved."

Following proposals for further developing the energy market with the strategic reserve and the decentralised capacity market, as well as the reform proposals for the German Renewable Energy Sources Act, the BDEW now presents a workable industry solution for the network side. This is an important contribution to the improvement in investment conditions announced in the German government's coalition agreement. The German Federal Network Agency will present its evaluation report by the end of the year and this will set the course for the third regulation period. "Our aim was to submit a workable proposal for the further development of the regulatory framework for distribution networks in good time. With this, we have achieved our aim", said Kohlmann.

The BDEW has developed an application process for companies which would be simple to implement in the scope of incentive regulation. In this way, the problem of delays can be solved for all distribution network operators. Basically, the process involves the increased capital costs from the investment being included, without delay, in the upper revenue limit of the network operator. The network operators should decide individually, on the basis of their investment requirements and the existing network regulation, whether an application is filed or not. In this way, the regulatory implementation and financial effect will be limited to genuine problem cases. "An application process has been developed which is practicable for network operators and regulatory authorities, which can be simply implemented and which avoids the disadvantages of the indiscriminate "watering can effect", explained Kohlmann. In the development of its application model, the industry has consciously built on the proposal to eliminate delays submitted by the German Laender in autumn 2013 in order specifically to show the Land regulatory authorities, which are responsible in Germany for most of the distribution network operators, a pathway acceptable for both sides.

After a three year discussion between ministries, authorities and industry, a solution is now on the table. "This industry proposal is a real breakthrough. In the next ten years, as a result of the massive increase in decentralised photovoltaic and wind energy facilities, investment of around 25 billion euros is required in the distribution networks alone. Failure to invest adequately in this area will either lead to unnecessary delays in the expansion of renewable energies or will foreseeably jeopardise the system security. "Therefore, an improvement of the investment conditions not only makes sense from the perspective of network operators but it is also absolutely essential for the realisation of the Energiewende", said Kohlmann.

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