EEG 2.0: BMWi Working Draft for Revision of Renewable Energy Sources Act

The Federal Ministry for Economic Affairs and Energy (“BMWi”) has drafted a first working version of a revised German Renewables Energy Sources Act (EEG). This first draft led to further clarification on the EEG 2.0 project, i.e. the reform of the EEG. The draft further specifies the elements presented earlier in the key point paper of BMWi , especially regarding the feed-in tariffs. It also contains some new provisions, which were not previously contained in the key point paper.

1. Introduction of New Expansion Corridors/Caps in EEG and Cuts of Financial Support

As previously reported the key point paper wants to introduce expansion corridors with ”breathing caps” (“atmender Deckel”) for the support of renewable power plants under the EEG. The BMWi draft now concretes these changes. Inter alia the draft provides for the following changes:

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, Sec. 20d EEG
  • Introduction of ”breathing caps” (“atmender Deckel”), similar to PV-installations:
    • Feed-in tariffs shall be reduced on 1 January, 1 April, 1 Juli, 1 October each year from the year 2016 onwards by 0.4% compared to the last three months according to Sec. 20d para 2 EEG.
    • The quarterly reduction shall increase by the following percentage if the total installed capacity of promoted installations exceeds the annual capacity expansion corridor, Sec. 20d, para 3 EEG:
      • by up to 200 MW: 0.5%
      • by up to 400 MW: 0.6%
      • by up to 600 MW: 0.8%
      • by up to 800 MW: 1.0%
      • by over 800 MW: 1.2%
    • The quarterly reduction shall be reduced by the following percentage if the total installed capacity of promoted installations falls below the annual capacity expansion target corridor
      • by up to 200 MW: 0.2%
      • by up to 400 MW:  0%
    • The quarterly reduction amounts to 0 % and the feed-in tariffs according to Sec. 29 shall increase by the following percentages, if  the total installed capacity of promoted installations falls below the annual capacity expansion target corridor.
      • by up to 600 MW: 0.1%
      • by up to 800 MW: 0.2%
      • by over 800 MW: 0.3%
  • New determination of basic and initial feed-in tariff. Feed-in tariffs contain also cost for marketing. In the previous EEG the marketing costs were covered by the management premium.
  • According to Sec. 29 para 1 EEG, the basic tariff shall amount to 4.95 ct/kWh (currently 4.77 ct/kWh, without management premium).
  • The initial tariff paid in the first five years after the installation is commissioned shall amount to 8.9 ct/kWh (currently 8.75 ct/kWh, without management premium).
  • New systematic for prolongation of the initial tariff in Sec. 29 para 2 EEG.
  • 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) are deleted;

b) Solar Power

  • Existing system mainly unchanged. Target corridor of 2,500 to 3,500 MW per year as in current EEG, with current indirect quantity control via breathing cap concept to continue, Sec. 20e EEG
  • Draft only contains forecast values for the feed-in tariffs, due to the concept of the breathing cap.

c) Biomass

  • Target of 100 MW per year
  • Support will focus on plants using mainly waste and residue; deletion of additional support for energy crops like corn
  • Slight changes regarding the feed-in tariffs due to the degression scheme of the EEG 2012. The feed-in tariffs contain now also the management premium (currently 0,225 Cent/kWh)  in the amount of 0,2 Cent/kWh. Currently the management premium is optional, and only granted if the operator chooses direct marketing. The feed-in tariffs are as follows:
    • 13.66 ct/kWh (currently 13.73, without management premium) for the first 150 kW of the rated average annual capacity;
    • 11.78 ct/kWh (currently 11.81, without management premium) for the rated average annual capacity up to 500 kW;
    • 10.5 ct/kWh (currently 10.56, without management premium) for the rated average annual capacity up to 5 MW; and
    • 5.58 cents per kilowatt-hour (currently 5.76) for the rated average annual capacity up to 20 MW.
  • Higher feed-tariffs only for bio-waste and liquid manure (new Sec. 27a, 27b)
  • Supporting scheme for biomass is adapted to general supporting scheme of EEG
  • Feed-in tariffs shall decrease on 1 January, 1 April, 1 Juli, 1 October each year from the year 2016 onwards by 0.5 % compared to the last three months according to Sec. 20 c para 2 EEG.

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.
  • The tariff paid for electricity from offshore installations shall amount to 3.9 ct/kWh (basic tariff), Sec. 31 para 1 EEG. Currently the basic tariff is 3.5 ct/kWh (without management premium).
  • During the first twelve years after the commissioning of the offshore installation the tariff shall amount to 15.5 ct/kWh (initial tariff), Sec. 31 para 2 EEG. Currently the initial tariff is 15 ct/kWh (without management premium).
  • If the offshore installation was commissioned prior to 1 January 2020 the installation operator shall receive an increased initial tariff of 19.4 ct/kWh during the first eight years from the date of commissioning (Stauchungsmodell).
  • Feed-in tariffs now contain also costs for direct marketing (management premium).
  • Feed-in tariffs shall decrease on 1 January each year from the year 2018 onwards by 0.5 Cent and by 1 Cent for offshore installations, which were put into operation before 1 January 2020 according to Sec. 31 para 3 EEG. Currently the decrease of feed-in tariffs is 7.0% from the year 2018 onwards.

e) Hydropower

  • No growth target.
  • Slightly changes regarding the feed-in tariffs due to the degression scheme of the EEG 2012 and the implementing of the costs for direct marketing in the feed-in tarffis, Sec. 23 EEG:
    • 12.52 ct/kWh (currently 12.45, without management premium) for the first 500 kW of the rated average annual capacity;
    • 8.25 ct/kWh (currently 8.13, without management premium) for the rated average annual capacity up to 2 MW;
    • 6.31 ct/kWh (currently 6.17, without management premium) for the rated average annual capacity up to  5 MW;
    • 5.54 ct/kWh (currently 5.39, without management premium) for the rated average annual capacity up to 10 MW
    • 5.34 ct/kWh  (currently 5.19, without management premium) for the rated average annual capacity up to 20 MW
    • 4.28 ct/kWh (currently 4.12, without management premium) for the rated average annual capacity up to 50 MW;
    • 3.3 ct/kWh (currently 3.33, without management premium) for the rated average annual capacity of over 50 MW.
  • Feed-in tariffs shall decrease on 1 January each year from the year 2016 onwards by 1 %

f) Geothermal Energy

  • Feed-in tariff increases from currently 25.0 ct/kWh to 25.2 ct/kWh, Sec. 28 EEG. Reason is that the feed-in tariffs contain now also the management premium (currently 0.225 ct/kWh)  in the amount of 0.2 ct/kWh.
  • No growth target.
  • Technology bonus (cf. Sec. 28 para. 2 EEG) deleted.
  • Feed-in tariffs shall decrease on 1 January each year from the year 2018 onwards by 5%.

2. Greater Market Exposure of Renewable Power Plants

In order to expose renewable power plants more to market forces the draft als implements the following suggestions of the key point paper:

a) Binding Direct Marketing Obligation

  • Change of the system: direct marketing shall be the rule,  only in exceptional cases the operator of renewable plans can receive the feed-in tariffs, Sec. 15 a EEG.
  • Only in the following cases a feed-in tariff can be received:
    • For small renewable energy plants (Sec. 22c EEG)
      • energy plants that were commissioned before 1 January 2016  with an installed capacity of less than 500 kW
      • energy plants that were commissioned after 31 December 2015 and before 1 January 2017 with an installed capacity of less than 250 kW
      • energy plants that were commissioned after 31 December 2016  with an installed capacity of less than 100
      • the applicable feed in tariffs for such small energy plants shall be reduced by 0.4 Cent/kWh for wind (on- and offshore) and solar energy, for all other renewable energy a reduction of 0.2 ct/kWh applies.
    • Outage compensation, Sec. 22d EEG
      • For a transition period companies can receive feed-in tariffs, if the cannot market the energy directly. In order to promote the direct marketing and to make the feed-in tariffs unattractive, the legislator decided to reduces in these cases the feed-in tariffs by a lump sum of 20% reduction.
    • The management premium currently part of the marketing premium is deleted and integrated into the feed-in tariffs.

b)  ”Green Electricity Privilege” 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)  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 shall 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).

d)  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. Reduction of EEG surcharge for energy-intensive companies

  •  The EU Commission has opened an in-depth investigation to examine whether the reduction granted to energy-intensive companies on the EEG surcharge is compatible with EU state aid rules. Nevertheless the reduction for energy-intensive companies shall remain but amended accordingly to the outcome of the EU-state aid proceedings.

4. Reduction of EEG surcharge for rail operators

  • For rail operators the new EEG lowered the requirements in order to receive a reduction, Sec. 42 EEG. Rail operators can apply for a reduction if their power consumption exceeds 3 GW (currently 10 GW).
  • The reduction apples only for energy consumption above 3 GW
  • In these cases the EEG surcharge is limited to
    • 15 % of the applicable EEG surcharge in 2015
    • 20% of the applicable EEG surcharge in 2016
    • 25% of the applicable EEG surcharge in 2017
    • 30% of the applicable EEG surcharge from 2018 onwards

Source: Arbeitsentwurf BMWi 10.02.2014 – Tagesschau

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6 Responses to “EEG 2.0: BMWi Working Draft for Revision of Renewable Energy Sources Act”


  • EEG 2030 RE BUILD-OUTS

    If the above proposed weighted average feed-in tariff of 0.12 euro/kWh were implemented at the start of 2015, an estimate of the EEG surcharge on household electric bills could be calculated as follows:

    EEG 2030 Surcharge Calculation: German total generation was 629,000 GWh in 2013. Assume it remains unchanged during the 2015 – 2030 period.

    Germany’s target is 50% RE by 2030 = 314,500 GWh; about 23.4% RE in 2013, or 147,100 GWh is already in place. Assume 24.5% RE, or 154,105 GWh at end 2014, i.e., about 160,395 GWh is to be added during the 2015 – 2030 period.

    Extra cost/kWh = 12 – 5 = 7 eurocent/kWh, assuming an average wholesale price at 5 c/kW for the 2015 – 2030 period. Much of the new wind energy will be offshore, and its unsubsidized energy cost is likely to be 15 – 20 eurocent/kWh.

    Approximate EEG surcharges MOSTLY ON HOUSEHOLD ELECTRIC BILLS = 0.07 x 160,375,000,000 kWh = $11.2 b euros; this item increases from zero at the start of 2015 to 11.2 b euros at the end of 2030.

    This amount is in addition to the 23.6 b euros (est) in 2014, say $24.5 b euros in 2015, which will be slowly declining, per existing feed-in tariff schedules.

    EEG 2030 RE and Capital Cost Calculation: The Federal Ministry for Economic Affairs and Energy (“BMWi”) has drafted a first working vision of a revised German Renewables Energy Sources Act (EEG). This first draft led to further clarification of the EEG 2.0 program, i.e. the reform of the EEG.
    http://www.germanenergyblog.de/?p=15302

    The draft revision includes 2030 capacity targets, GW, for new onshore wind, new offshore wind, new solar, new biomass, but no targets for hydro and geothermal energy.

    Germany’s total generation was 629,000 GWh in 2013. Assume it remains unchanged during the 2015 – 2030 period.
    The new RE production, GWh, in 2030 is estimated as follows:

    New wind onshore = 2.5 GW/yr x 15 yrs x 8,760 hr/yr x CF 0.20 = 65,700 GWh
    New wind offshore = 15 GW by 2030 x 8,760 x 0.40 = 52,560 GWh
    New solar = 2.75 GW/yr x 15 x 8,760 x 0.10 = 36,135 GWh
    New biomass = 1.5 GW by 2030 x 8,760 x 0.70 = 9,198 GWh
    Total new RE = 163,593 GWh

    The proposed new GW, installed per growth targets, will produce a little more than the above 160,395 GWh.

    The capital cost of the proposed new RE capacity is estimated as follows:
    New wind onshore: Cost 2 million euro/MW; Capacity 37,500 MW; Capital cost 75 b euros.
    New wind offshore: Cost 4 million euro/MW; Capacity 15,000 MW; Capital cost 60 b euros.
    New solar: Cost 2 million euro/MW; Capacity 41,250 MW; Capital cost 82.50 b euros.
    New biomass: Cost 2.5 million euro/MW; Capacity 1500 MW; Capital cost 3.75 b euros.
    Total new capital cost by 2030 = 221.25 b euros.

    The new capital cost excludes:

    – EEG supplementary payments, 4.2 b euros in 2013, likely increasing in future years. See above.
    – Onshore/Offshore transmission system build-outs, about 75 b euros, if buried on shore.
    – Capital costs and O&M costs for balancing and backup build-outs, billions of euros, as Germany cannot continue to use neighbors’ grids for that purpose.
    – Capital costs and O&M costs for maintaining “capacity adequacy” of conventional generating units for when wind and solar energy are minimal.

    The end result will be, absent utility-scale, economically-viable energy storage (not yet invented), a capacity of RE systems that produces expensive energy, plus a capacity of conventional energy systems for “capacity adequacy”. The levelized cost of such a dual energy system will be about 2 – 3 times greater than without the RE systems.

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