Article on 2014 German Renewable Energy Sources Act Revision Published

Our article “The 2014 German Renewable Act revision – from feed-in tariffs to direct marketing to competitive bidding” has just been published online in the Journal of Energy & Natural Resources Law (JENRL). On 16 pages (with lots of footnotes), the article describes the major changes to the German support system for renewable energy sources following the 2014 revision of the German Renewable Energy Sources Act (EEG 2014).

1. Need for Reform – Complexity of the Revised EEG

The EEG reform was driven by two aspects. Firstly EEG-related costs for consumers had risen to EUR 19.37 billion in 2013. The government therefore wanted to limit costs in view of its goal of a share of renewables rising to 80% in gross electricity consumption by 2050 (cf. Section 2 no. 4 EEG 2012). Secondly the revision was influenced by the opening of an in-depth inquiry by the European Commission in December 2013 investigating compliance with EU state aid rules of the reductions granted under the EEG 2012 to energy-intensive companies on the surcharge promoting renewable energy sources in Germany (“EEG-surcharge”) and to suppliers that sourced 50% of their electricity from domestic renewable electricity (“green electricity privilege”).

The EEG 2014 is certainly no example for a simple and concise law. On the contrary, the EEG 2014 has grown to a law with 104 sections and four annexes, containing transitional provisions that are longer than the first EEG and certainly longer than its precursor, the very lean 1991 Grid-Feed-In Law (Stromeinspeisungsgesetz).

2. Information on Main Objectives, Major Changes and Unchanged Provisions

The article sheds light on the main objectives of the EEG 2014 and the major changes, but also highlights aspects that remained unchanged.

a) Main Objectives

The most important objectives can be summarized as integration of renewable energy and mine gas into the electricity system by making direct marketing by operators mandatory, while focusing to a greater extent on cost-effective technologies and paving the way for yet another overhaul of the EEG in 2017 when financial support under the EEG shall be determined by auctions.

b) Key Elements that Remained Unchanged

As regards the key elements that remained unchanged, renewable energy continues to enjoy feed-in priority in the grids. Furthermore grid operators remain obliged to connect renewable power plants to their grids and pay above-market remuneration (primarily market premiums paid in addition to the revenue of self-marketed energy for new plants; feed-in tariffs are primarily paid for small new plants and plants operating since before 1 August 2014). Financial support continues to be granted for a period of 20 years plus the year of commissioning and is subject to regular reductions for new plants (so-called degression).

c) Main Changes

From the many changes we would like to point out the following, referring readers to the article for further information.

  • Expansion corridors and targets: The EEG 2014 has introduced annual expansion “corridors” (Ausbaupfade) for onshore wind power (2,500 MW net), solar power (2,500 MW gross) and biomass (100 MW net) as well as reduced the targets for offshore wind power to 6.5 GW by 2020 and 15 GW by 2030.
  • Mandatory direct marketing: Under the EEG 2014 owner of most renewable power plants are obliged to sell the energy themselves. They can however claim a so-called market premium. Feed-in tariffs are only paid for small plants and in exceptional cases.
  • Energy generated by new renewable power plants and consumed by the operator himself is also at least partially subject to the EEG surcharge, which consumers have to pay in support of renewable energy.
  • To bring the exemptions from EEG surcharge payments for energy-intensive companies in line with the European Guidelines on State Aid for Environmental Protection and Energy 2014-2020 (EEAG) the respective provisions in EEG have been amended.
  • The EEG already announces the next overhaul to comply with the EEAG. As of 2017 financial support under the EEG shall be determined by auctions. Recently the first auction for freestanding PV capacity with which Germany is trying to gain experience in tendering capacity was completed (for more information, please see here). It is still to early to draw conclusions.

3. Outlook

With the upcoming change of EEG support as of 2017, the EEG 2014 reform was only been an interim step. Whether the envisaged reduction of financial support across all technologies from 17 ct/kWh under the EEG 2012 to 12 ct/kWh can be reached remains to be seen (regarding the costs for 2014, please see here).

Besides, the EEG reform did not solve other pressing issues like the need to provide enough back-up capacity for an energy supply provided by an increasing amount of renewable energy. In October last year the Energy Ministry published a Green Paper on the future development of the German electricity market that looked into two basic approaches: an optimised electricity market (“electricity market 2.0″) and a further market alongside the electricity market to maintain reserve capacity (“capacity market”). Comments on the Green Paper were due by 1 March 2015. The ministry announced to review the comments and publish a White Paper by end of May 2015.

In the meantime: We hope you will find our JENRL EEG 2014 article helpful! If you have problems accessing the article, please let us know.

Source: Journal of Energy & Natural Resources Law, Vol 33, No 2, 131 – 146, International Bar Association

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