Models of Compensation in Europe


Minimum Price €/kWh

Netherlands Germany

France Portugal Austria Spain



United Kingdom



In Denmark the Windmill Law requires electric utilities to purchase energy from private wind turbine owners at 85% of the consumer price of electricity plus ecotax relief of about $0.09/kWh. Electric utilities receive about $0.015/kWh subsidy for wind power. The development of wind power was tied to the Energy 21 goal of reducing CO2 emissions by 20% by 2005.

Germany accounted for half the European market after 1995. Germany adopted the Electricity Feed Law (EFL) in 1990 as an instrument for climate protection, saving fossil fuels, and promoting renewable energy. The law obliged utilities to buy any renewable energy from independent power producers at a minimum price defined by the government, which is based on the average revenue of all electricity sales in Germany. The initial value in 1991 was €0.16/kWh. The EFL was modified in 1998, which set a regional cap of 5% for renewable electricity. Since the Renewable Energy Sources Act was enacted, the electricity generation in Germany from renewable energy almost doubled from 6% in 2000 to 13% in 2007 [45]. Most of that is generated by wind.

Earlier programs for promoting wind (100 MW and expansion to 250 MW program) received kWh support. Because so much wind was installed, in 2004 it was changed to €0.085/kWh for 5 years and then €0.055/kWh for the next 15 years. There was a decrease of 2.5% per year, which meant in 2010 the price would be €0.079/kWh for 5 years and then €0.05/kWh for 15 years. Some states in Germany also gave a 50% investment grant in the late 1980s and early 1990s. Special low-interest loans for environmental conservation measures were also available for financing wind projects. These factors contributed to the massive growth of wind in the 1990s in Germany, which ranks number one in the world in installed capacity.

India ranks fifth in the world in installed capacity due to a favorable fiscal/policy environment. In the last 10 years, wind power development in India has been promoted through R&D, demonstration projects and programs supported by government subsidies, fiscal incentives, and liberalized foreign investment procedures.

Central government: Income tax holiday, accelerated depreciation, duty-free import, energy capital/interest subsidies.

State governments: Buyback, power wheeling and banking, sales tax concession, electricity tax exemption, demand cut concession offered to industrial consumers who establish renewable power generation units, and capital subsidy. Tamil Nadu and several other state electric boards purchase wind energy at about $0.064/kWh.

Renewable Energy 101

Renewable Energy 101

Renewable energy is energy that is generated from sunlight, rain, tides, geothermal heat and wind. These sources are naturally and constantly replenished, which is why they are deemed as renewable. The usage of renewable energy sources is very important when considering the sustainability of the existing energy usage of the world. While there is currently an abundance of non-renewable energy sources, such as nuclear fuels, these energy sources are depleting. In addition to being a non-renewable supply, the non-renewable energy sources release emissions into the air, which has an adverse effect on the environment.

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