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Who pays the cost of connecting and reinforcing?
Normally, FIT laws include provisions for cost sharing between producers and grid operators, as the costs for grid connection have an important impact on the economic viability of a project, and on how much electricity can be produced.
The three methods of charging identified below can be distinguished and although these are often not included in the law itself, we recommend that they should be. Read more about how these approaches were applied in 2005 in EU countries.
Regardless of method, grid connection rules should be fully transparent and not discriminate against electricity from renewable energy sources. Read more about transparency.
Shallow connection charging
The shallow method of connection charging minimizes the costs for producers, and allows the expected cost of their projects to be estimated at an early stage. We highly recommend this method.
If you apply this method:
- producers will pay for the costs of the equipment needed to connect their plant physically to the nearest point of the electricity distribution grid; and
- grid operators will pay any costs for reinforcement of the network - costs which are passed to the final consumer by including them in the system charges.
The advantage of this method is that producers will tend to choose the location for their renewable energy plants based on resource, not grid, availability. The disadvantage is that this could cost more if grid extensions are needed for the best resource locations.
For example, the shallow method of connection charging was enacted in Germany.
Germany
English
Renewable Energy Sources Act 2004, Article 13 provides that:
(1) The costs associated with connecting plants generating electricity from renewable energy sources or from mine gas to the technically and economically most suitable grid connection point and with installing the necessary measuring devices for recording the quantity of electrical energy transmitted and received shall be borne by the plant operator. In the case of one or several plants with a total capacity of up to 30 kilowatts located on a plot of land which already has a connection to the grid, this plot's grid connection point shall be deemed to be its most suitable connection point; if the grid system operator establishes a new connection point for the plants, he shall bear the resulting incremental cost. Implementation of this connection and the other installations required for the safety of the grid shall meet the plant operator's technical requirements in a given case as well as the provisions of Article 16 of the Energy Industry Act. The plant operator may have the connection and the installation and operation of measuring devices implemented either by the grid system operator or by a qualified third party.
(2) The costs associated with upgrading the grid in accordance with Article 4(2) that solely result from the need to accommodate new, reactivated, extended or otherwise modernised plants generating electricity from renewable energy sources or from mine gas for the purchase and transmission of electricity produced from renewable energy sources shall be borne by the grid system operator whose grid needs to be upgraded. He shall specify the required investment costs in detail. The grid system operator may add these costs when determining the charges for use of the grid.
Deutsch
Gesetz für den Vorrang Erneuerbarer Energien 2004, § 13 lautet:
(1) Die notwendigen Kosten des Anschlusses von Anlagen zur Erzeugung von Strom aus Erneuerbaren Energien oder aus Grubengas an den technisch und wirtschaftlich günstigsten Verknüpfungspunkt des Netzes sowie der notwendigen Messeinrichtungen zur Erfassung der gelieferten und der bezogenen elektrischen Arbeit trägt der Anlagenbetreiber. Bei einer oder mehreren Anlagen mit einer Leistung von insgesamt bis zu 30 Kilowatt, die sich auf einem Grundstück mit bereits bestehendem Netzanschluss befinden, gilt der Verknüpfungspunkt des Grundstücks mit dem Netz als günstigster Verknüpfungspunkt; weist der Netzbetreiber den Anlagen einen anderen Verknüpfungspunkt zu, ist er verpflichtet, die daraus resultierenden Mehrkosten zu tragen. Die Ausführung des Anschlusses und die übrigen für die Sicherheit des Netzes notwendigen Einrichtungen müssen den im Einzelfall notwendigen technischen Anforderungen des Netzbetreibers und § 49 des Energiewirtschaftsgesetzes entsprechen. Der Anlagenbetreiber kann den Anschluss der Anlagen sowie die Errichtung und den Betrieb der Messeinrichtungen von dem Netzbetreiber oder einem fachkundigen Dritten vornehmen lassen.
(2) Die notwendigen Kosten eines nur infolge neu anzuschließender, reaktivierter, erweiterter oder in sonstiger Weise erneuerter Anlagen zur Erzeugung von Strom aus Erneuerbaren Energien oder aus Grubengas erforderlichen Ausbaus des Netzes im Sinne von § 4 Abs. 2 zur Abnahme und Übertragung des Stroms aus Erneuerbaren Energien trägt der Netzbetreiber, bei dem der Ausbau erforderlich wird. Er muss die konkret erforderlichen Investitionen unter Angabe ihrer Kosten im Einzelnen darlegen. Der Netzbetreiber kann die auf ihn entfallenden Kosten bei der Ermittlung des Netznutzungsentgelts in Ansatz bringen.
Deep connection charging
The deep method of connection charging puts higher costs on producers. Experience has shown that this charging method is one of the major barriers to increasing electricity production from renewable sources, and so we do not recommend this method.
If you apply this method:
- producers will pay for the costs of the equipment needed to connect their plant physically to the nearest point of the electricity distribution grid, plus all the cost of any network reinforcement necessary to connect their plant,
- grid operators will pay nothing.
The advantage of deep connection charging is that it provides an incentive to produce green electricity at locations where grid connection costs will be lowest, thus lowering cost for the electricity system as a whole. The disadvantage of this approach is prohibitively high connection costs that might hamper the rapid deployment of electricity produced from renewable energy sources and discriminate against renewable producers.
Mixed or shallower connection charging
The mixed or shallower method of connection charging combines the shallow and deep methods. This approach can be seen as a "compromise" between the two objectives of giving some locational incentives and reducing the burden on the producer to pay grid reinforcement costs.
If you apply this method:
- producers will pay for the costs of the equipment needed to connect their plant physically to the nearest point of the electricity distribution grid; and
- producers and grid operators will share any possible costs of grid reinforcement, with producers paying usually an amount based on an assessment of their proportional use of the new infrastructure. In this case it is especially important that the rules to calculate the costs covered by each party are clear and not discriminatory.
Include this feature in your proposed law
How do I compile my proposed law?
Here you can choose the draft sample text provided for applying the shallow method of connection charging (Option A) or choose to draft your own text offline (Option B).
If you choose Option A, the text provided will appear as section 5(3) in your proposed law document with the section number and title. Terms in the text which have been defined appear in bold, and will automatically appear in the Definitions section at the end of your document.
If you choose Option B, the text in square brackets will appear in section 5(3) of your document with the section number and title.