EEG 2.0: Proposal for Last Minute Changes to EEG 2014 Reform Bills

To meet concerns by the EU Commission, the ruling conservative CDU/CSU parties and their Social Democrat allies (SPD) agreed to amend the EEG 2.0 bills. The revised proposals also merges the currently separate bills amending the Renewable Energy Sources Act (EEG) and EEG special equalisation scheme, which provides for a reductions of the renewables surcharge (EEG surcharge) for energy-intensive companies and railroad operators.

The 204-page proposal comes as input for the Bundestag’s Economic Affairs and Energy Committee, very shortly before Parliament is due to hear the second and final third reading of the bills this coming Friday, June 27th, and vote on the matter. Long-time Parliament member Renate Künast, chairman of the Committee on Legal Affairs of Parliament, was quoted by the magazine Der Spiegel complaining about the legislative procedure.

Below we will summarize what upon first review appear to be the main amendments. If readers wish to compare, please use the following links to the original EEG reform bill and the bill amending the special equalisation scheme (for our blog post on the matter, please click here; the original bill can be accessed here).

1. EEG Surcharge for Imported Renewable Power

Recently voiced concerns by the European Commission that levying the EEG surcharge on imported renewable power might violate Articles 30 and 110 TFEU led to the introduction of a new section on tendering that will also allow tenders from other European countries. According to a new Section 2 para. 6 of the proposed EEG 2014, future tenders to establish the scope of financial support under the EEG that shall be carried out by 2017 at the latest shall be open to power from European countries, covering at least 5% of newly installed capacity. The system will be subject to  certain further restrictions, in particular the principle of reciprocity.

2. Own Consumption of Power by Operators

As reported yesterday, the Commission raised concerns over the provisions regulating a partial exemption of own consumption of power by operators of power plants from the renewables surcharge (EEG surcharge).

According to revised proposal, the following shall apply regarding this important matter for German industry:

  • Uniform 40% surcharge for all new power plants, but 100% surcharge for all new power plants that are not renewable power plants or highly efficient CHP plants;
  • Staggered introduction of the above surcharge: 30% surcharge in 2015 and 35% surcharge in 2016, as off 2017 40% surcharge;
  • Small installations with an installed capacity of up to 10 kW remain exempted from paying the EEG surcharge for the first 10 MW of self-consumed power;
  • Despite concern by the Commission: No EEG surcharge for existing plants that are completely exempted under the currently applicable EEG. However, the government wants to review the matter in 2017. The accompanying justification for the proposal says that a revision has to be in compliance with EU state aid law.
  • For the purpose of equal treatment, the self-consumption privilege will apply for all modernisations of existing plants made in a spatial context (räumlicher Zusammenhang) of generation and consumption. Besides, a special provision for existing for blast furnace gas-fired power plants operated for self-consumption will be introduced;
  • The right to enact a statutory ordinance will be introduced to the Combined Heat and Power Act, which allows to adapt support under the law if necessary following the changes regarding the payment of the EEG surcharge for own consumption (that is currently completely exempted);

 3. Special Equalisation Scheme

Concerning the other highly important topic for German industry, the revised proposal suggests to

  • Merge the bill on the special equalisation scheme of the EEG, which provides for a reductions of the renewables surcharge (EEG surcharge) for energy-intensive companies and railroad operators, with the main EEG reform bill (regarding the reason for the previously two separate bills, please see here) and also include a recommendation by the government on conversion and restructuring of companies benefitting from the special equalisation scheme;
  • The sectors of eligible companies shall remain unchanged because of the requirements in the Commission’s state aid guidelines for assessing public support projects in the field of energy and the environment for the period 2014 to 2020; the right to enact a statutory ordinance enables the government to make amendments if the Commission changes requirements;
    • The CDU/CSU and SPD parliamentary groups propose an additional resolution of the Bundestag to get the Commission to change its list of eligible industries for exemptions in the Commissions energy state aid guidelines, as certain industries (e.g. forges, hardening plants) are not currently listed as eligible, even though they comply with the substantial exemption requirements;
  • The minimum surcharge for companies from the non-ferrous sector will be lowered to 0.05 ct/kWh;
  • Further changes regarding more flexibility in applying for the special equalisation privilege, a change from the own consumption privilege to the special equalisation privilege, the hardship clause, requirements for an energy management for companies applying for a reduction of the EEG surcharge under the special equalisation scheme.

4. Support under the EEG for the Various Sources of Renewable Energy

Changes affect

  • Biomass,
    • The protection of legitimate interests of owners of existing biomass power plants is improved compared with the original bill on the EEG reform;
    • The quantitative target for biogas in the Gas Grid Access Ordinance (GasNZV) is deleted.
  • Hydro Power
    • The annual degression of financial support is lowered from 1% to 0.5% reflecting the potential for cost cuts;
    • Existing hydro power plants are able to claim benefits if they increase capacity by at least 10% following retrofitting;
    • Certain requirements for financial support apply with regard to the location and the design (already applicable under the EEG 2012, amendment only in comparison to the initial reform bill).
  • Offshore Wind Power
    • To help reach the 6.5 GW expansion target for 2020, the proposed rules for the regulator (Federal Network Agency) to withdraw grid capacity from projects that do not move forward are tigthened, so that BNetzA shall (and not only may) withdraw unused capacity.
  • Geothermal Power
    • Plants that receive a license pursuant to mining law before 2016 and start operations before 2021 can still benefit from the old support regime under the EEG 2012.
  • Mine Gas
    • Financial support is slightly lowered to avoid excess support as the explanatory text points out.

5. Market Integration of Renewables

It is the officially declared intention of the EEG 2.0 or EEG 2014 to reduce EEG-related costs by subjecting renewables to market conditions to a greater degree by making direct marketing mandatory.

The latest proposal contains the following changes compared with the former version of the EEG 2014:

  • Speedier Introduction
    • As of 2016 all new installations with a capacity of 100 kW and more are obliged to market electricity directly.
  • No Financial Support in Times of Negative Prices (Direct Marketing Premium or in Limited Cases Feed-in Tariffs)
    • In line with the Commission’s state aid guidelines financial support under the EEG 2014 (i.e. payment of a direct marketing premium or feed-in tariffs for small installations) will not be granted if electricity prices at the EPEX Spot exchange are negative for more than six hours
    • Plants have to be (remote-)controllable by grid operators; certain exceptions apply.
  • Statutory Ordinance on Green-Electricity Privilege
    • The current EEG 2014 draft does no longer contain the so-called “green-electricity privilege”, i.e. a reduction on the EEG-surcharge granted to suppliers that source 50% of their electricity portfolio from domestic renewable electricity. Yet the revised proposal suggests to introduce the right to enact a statutory ordinance regulating the marketing of green electricity, but says it could only be enacted if it was in compliance with the Commission’s state aid guide lines and would not lead to a higher EEG surcharge for the remaining electricity consumers.

6. Underground Power Cables

Various other minor changes are proposed, among them an amendment of the Federal Requirement Plan for Transmission Networks, according to which underground power cables may be permitted parallel to existing high and extra-high voltage overhead cables on a case to case basis for the pilot projects listed in the law.

7. Further Steps

The majority of the Bundestag’s Committee for Economic Affairs and Energy has agreed with the proposed latest changes as introduced by the CDU/CSU and the SPD parliamentary groups.  The Bundestag is scheduled to vote on the amended proposal on Friday. The debate is scheduled to start at 9:00 CEST and planned to last for 1:10 hours. The vote of the Bundesrat is expected for 11 July 2014. Entry into force shall be 1 August 2014.

It remains to be seen to what extent all pending European law issues will really be resolved with the EEG 2.0 revision. The European Court of Justice’s upcoming decisions in the Ålands Vindkraft case (C-573/12), the Essent Belgium case (C-204/12) or the pending EEG state aid law cases on the EEG 2012 exemptions may require further adjustment depending on the Commissions and the  court’s findings on the application of the Treaty principle of the free movement of goods and its state aid rules on renewable energy support schemes and its exemptions.

Sources: Bundestag, Recommendations and Report Economic Affairs and Energy Committee

Related posts:

 

4 Responses to “EEG 2.0: Proposal for Last Minute Changes to EEG 2014 Reform Bills”


Comments are currently closed.