Today’s Cabinet Meeting: No Decision on Ordinance Regulating Competitive Bidding for Financial Support for PV Power Plants

The planned Ordinance for Competitive Bidding for Financial Support of Freestanding Installations (FFAV) again did not figure of the agenda for today’s meeting of the German Federal Cabinet. It therefore looks like the originally planned entry into force of the ordinance in January 2015 will have to be postponed.

The Federal Ministry for Economic Affairs and Energy has for a while been working on an Ordinance for Competitive Bidding for Financial Support of Freestanding Installations (Verordnung zur Ausschreibung der finanziellen Förderung für Freiflächenanlagen – Freiflächenausschreibungsverordnung – FFAV). It is intended to contain details for a competitive bidding system for bigger PV system in the 2015/2016 transition period to comply with the Commission’s EEAG state aid law regime.

According to the Renewable Energy Sources Act (EEG) that entered into force on 1 August 2014 (EEG 2014), financial support for energy from renewable energy sources, as of 2017, shall be determined by auctioning. As a first step towards this change, the EEG stipulates that support for freestanding solar power plants shall be determined by auctioning (Section 55 EEG). With these pilot projects the government and the competent authorities shall gain experience with this new instrument, before the auctioning system shall in principle become mandatory in 2017 for all kinds of renewable energies. Therefore Section 88 EEG 2014 authorises the government to issue an ordinance that regulate the details of the auctioning procedure.

A first internal proposal was circulated by the Federal Ministry for Economic Affairs and Energy at the end of October 2014, according to which the first auction is to start on 1 April 2014. Whether this auction can now go ahead as planned remains to be seen.

Germany is also under obligation by European state aid regulations to start competitive bidding processes to determine financial aid for renewable energy sources.

In its state aid approval decision of 23 July 2014 on the revised EEG 2014, the Commission pointed out that the German support regime needed to comply with the Guidelines on State Aid for Environmental Protection and Energy 2014-2020 (EEAG), saying inter alia:

“(239) In addition, during a transitional phase covering the years 2015 and 2016, aid for at least 5% of the planned new electricity capacity from renewable energy sources needs to be granted in a competitive bidding process on the basis of clear, transparent and non-discriminatory criteria (point 127 of the EEAG).”

The first draft had been strongly criticised by the German Farmers’ Association, as the farmers were against new PV installations on farmland and other greenfield sites. Instead, they requested to keep the current restrictions, limiting freestanding PV installations mainly to plots of land already sealed and land previously used for economic, transport, housing or military purposes. However, if the restriction to non-farmland will not be softened for the FFAV, it may not be possible to effectively secure enough properties on which PV power plants can be built using a competitive bidding process.

Source: Bundesregierung

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