Underground cables relating to the topic network expansion; source: Bundesnetzagentur

© Bundesnetzagentur

The Federal Ministry for Economic Affairs and Energy today published the study entitled "Compensation for land owners and users relating to grid expansion - the current approach".

State Secretary Rainer Baake said: "Land owners and users must receive fair compensation for the way their rights are affected by grid expansion. This is crucial if the grid expansion is to be rapid and meet with public acceptance. We will now examine the findings of the study and engage in an objective discussion about them."

The Federal Government regards fair compensation for property rights affected by grid expansion as an important element for public acceptance and thus for the success of the energy transition as a whole. For this reason, the Federal Ministry for Economic Affairs and Energy asked Frontier Economics and White & Case in September 2015 to assess the current approach to providing compensation in Germany.

The study depicts the current approach to providing compensation for the use of agricultural and forestry land for the power grid above 110 kilovolts.

The study shows that Germany already has a broad range of legal instruments for the payment of compensation, and that compensation is indeed paid. For example, the study finds that in practice compensation is paid both for the encumbrance of a property with an easement and for subsequent damage to the property. This usually takes the form of a one-time payment.

Also, in more than 95% of cases, the grid operators concluded contracts with the land owners on the rights to use the land, so that no expropriation takes place. In a large number of cases, this compensation is paid on the basis of framework agreements between the grid operators and the interest groups. This contractually agreed compensation is much higher than compensation paid due to expropriation. For an easement for an overhead powerline, 20% of the market value of the land is usually paid; for underground cables, the amount is generally 25-30% of the value of the land. And then there are additional payments, such as a bonus for a quick agreement.

The next step will be to discuss the findings with the relevant stakeholders.

You can find the study (in German) here.

You can find out more about the current German energy policy in the fortnightly Newsletter "Energiewende direkt".