The cabinet retreat in Meseberg, Brandenburg, led to further clarification on the EEG 2.0 project, i.e. the reform of the German Renewables Law (EEG). The key point paper has been supplemented by an Annex to further specify intended modifications of the EEG. Besides the paper includes a protocol statement by three federal ministries regarding the planned changes relating to biomass.
1. Introduction of New Expansion Corridors/Caps in EEG and Cuts of Financial Support
As already mentioned, the key point paper wants to introduce expansion corridors with “breathing caps” (“atmender Deckel”) for the support of renewable power plants under the EEG. It wants to cut costs from an average financial support across all technologies of 17 ct/kWh under the currently applicable EEG to 12 ct/kWh for new installations by 2015. The 17 ct/kWh for existing installations and resulting from the “learning curve” will have to be paid off, as the government does not intend to retroactively alter previous grants.
According to the key point paper and the Annex, the following changes are planned.
a) Onshore wind power
- Aim to have up to 2,500 MW new capacity, with annual growth target corridor of 2,400 to 2,600 MW;
- The so-called “repowering” bonus for replacing old wind turbines by newer, more powerful ones (Repoweringbonus; cf. Section 30 EEG) and the bonus for providing system services (Systemdienstleisungsbonus; cf. Section 29 para. 2 sent. 3 EEG) shall be deleted;
- So-called “excessive” support for good wind location shall be reduced in a two-step reference yield model. Initial support shall be reviewed after 5 years. Depending on result, it shall support shall be modified. 77.5% locations initial feed-in tariffs shall be paid for a further 15 years. For 130% and upwards locations, feed-in tariffs shall end after five years. In between linear adjustment. Payments after inintial feed-in tarif period reduced to 4.95 ct/kWh (cf. Annex to key point paper, no. 5 for further details);
- As a result the average 20-year support in 2015 shall be 10% to 20% lower than in 2013;
- Besides the support is subject to degression and a so-called “breathing cap” shall be introduced as a first step, i.e. a legal provision similar to the one for solar power that adjusts financial support if the expansion target is exceeded or not reached;
- Starting in 2017 auctioning shall be the rule for determining financial support (cf. page 2, no. 2).
b) Solar power
- Target of 2,500 MW per year, with current indirect quantity control via breathing cap concept to continue (which presently contains a 2,500 to 3,500 MW target corridor in Sec. 20a EEG);
- Solar power is often consumed to a certain extent by the operators themselves (in particular energy generated in rooftop plants). Under the current EEG self-consumed power as such is privileged (cf. Section 37 para. 3 sent. 2). Therefore please also see the planned changes for self-consumption below.
- Support will focus on plants using mainly waste and residue;
- It is expected that this will lead to annual growth of 100 MW (cf. key point paper, page 10);
- The costly bonus for gas processing will be deleted;
- A new degression model for financial support shall be introduce shall ensure that annual growth does not exceed 100 MW (Annex, pages 2,3);
- The extension of existing biomass plants shall be remunerated according to the amended EEG;
- Incentives for existing and new biomass power plants shall be increased to adjust power production more to market needs. The statement by the three ministries BMVI, BMEL and BMZ points out that the extension of power plants that allows a market-oriented production shall benefit from the old support regime, provided power is marketed directly and the total output does not increase.
- The statement by the three ministries BMVI, BMEL and BMZ also says that biomass plants with a capacity up to 75 kW shall continue to receive support pursuant to the EEG 2012.
d) Offshore wind power
- Reduction of the national targets for offshore wind power from 10 MW to 6.5 GW by 2020 and from 25 GW to 15 GW by 2030;
- Management of growth until 2020: Through grid connection confirmations (Netanschlusszusagen);
- Management of growth until 2030: Tender or other cost-efficient instruments;
- The increased offshore-funding model (Stauchungsmodell) shall be extended by two years until 13 December 2019 (for more information on the so-called “Stauchungmodel”, please see here);
- The degression of financial support shall be amended so as to reflect technological progress and to render the basic remuneration model (as opposed to the Stauchungsmodel) more attractive (for more information, please see Annex, pages 5 and 6)
- Stauchungsmodell: 2017: 19 ct/kWh, 2018 18 ct/kWh, 2019 17 ct/kWh
- Base model: annual decrease 0.5 ct/kWh from 2017, i.e. 2017: 15 ct/kWh, 2018 14.5 ct/kWh, etc.
- 0.4 ct/kWh to be added for direct marketing
- No growth target;
- Support will continue and requirements be simplified (cf. key point paper, page 12)
f) Geothermal Energy
- No growth target;
- Support will continue, but the technology bonus (cf. Section 28 para. 2 EEG) be deleted (cf. key point paper, page 12)
2. Greater Market Exposure of Renewable Power Plants
In order to expose renewable power plants more to market forces the key point paper and the Annex propose the following.
a) Binding Direct Marketing Obligation
- The marketing premium paid in addition to the sale of green electricity by the operators themselves (cf. Section 33g EEG) that operators can currently opt for instead of receiving a fixed feed-in tariff becomes obligatory as follows:
- With the entering into force of the new EEG for all new plants with a capacity of 500 kW or more
- As of 2016 for all new plants with a capacity of 250 kW or more;
- As of 2017 for all new plants with a capacity of 100 kW or more.
- The management premium currently part of the marketing premium is deleted. An amount covering marketing costs is included in the market premium (for more information, please refer to pages 3 and 4 of the Annex).
b) “Green Electricity Privilege” to Be Deleted
In December 2013, the EU Commission has opened an in-depth investigate into the reduction on the renewables surcharge (EEG-surcharge) granted to suppliers that source 50% of their electricity portfolio from domestic renewable electricity (“green electricity privilege”). This privilege shall be deleted.
c) Auctioning to Determine Financial Supports
- As of 2017 the first round of auctioning to determine financial support shall begin;
- This shall be preceded by a pilot project for freestanding 400 MW solar power plants, the particulars of which shall be set out in an ordinance following approval of the new EEG.
3. Self-consumed Power
Power generated by a plant operator and consumed by himself shall contribute to the costs for grid expansion as follows:
- New power plants shall pay 90% of the renewables surcharge (EEG surcharge) that amounts to 6.24 ct/kWh in 2014;
- Renewable power plant operators, operators of CHP plants and process-related cogeneration gases (Kuppelgasnutzungen) shall only pay 70% of the EEG surcharge;
- Existing power plants shall continue to benefit from an EEG surcharge exemption of up to 5.28 ct/kWh (the 2013 level);
- New and old power plants with a capacity of up to 10 kW do not have to pay the EEG surcharge for up to 10 MWh annually;
- Generation needed to power the plant itself (Kraftwerkseigenverbrauch) shall not be subject to the EEG surcharge.
4. European Law Context
The key point paper acknowledges that the EEG reform is “embedded in the European context”. The German Federal Government supports an internal EU legally binding climate target of at least 40% by 2030 within a target triad of greenhouse gas reduction, renewable energies and energy efficiency.
The EEG revision shall take place in parallel with the revision of the European state aid provisions regarding support of renewable energies. Even though the Federal Government does not consider the EEG to be state aid, it will consider the discussions on the European level and will actively participate in them. Because important concerns of the European Commission, for example better market integration of renewable energies, are also in the national interest. The Federal Government aims at achieving greatest possible coherence with the new state aid provisions. However, this also makes it necessary that the European legal framework shall be developed in such a way that it continues to enable support for renewables energies oriented on national realities, and that also in the future competitiveness of electricity intensive industries shall be ensured.
5. Next Steps
The key point paper confirms and specifies the schedule for the EEG reform already mentioned:
- 9 April 2014: bill amending the EEG to be approved by
- 23 May 2014: first reading of EEG bill by Bundesrat (Federal Council, i.e.
the body that represents the interests of the sixteen German states
on the federal level)
- May/June 2014: readings of EEG bill in Bundestag (Parliament)
- 26/27 June 2014: bill shall be
approved by Bundestag;
- 11 July 2014: bill shall be approved by Bundesrat;
- 1 August 2014: amended EEG enters into force
Please note that the federal ministries for transport and digital infrastructure (BMVI), food and agriculture (BMEL) and for economic cooperation and development (BMZ) said in a statement published together with the key point paper that the aspects of the reform included in the Annex, which the Ministry for Economic Affairs and Energy (BMWi) submitted at short notice, needed to be further reviewed in the legislative process.
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