BMWi Presents Key Point Paper for German Renewable Energy Auctions in 2017 and Launches Consultation

The Federal Ministry for Economic Affairs and Energy has presented key points for auctioning financial support for onshore and offshore wind power and photovoltaics as of 2017 and launched a consultation. Comments have to be submitted by 1 October 2015.

1. General Information on Renewable Power Auctions as of 2017

According to Section 2 para. 5 Renewable Energy Sources Act as applicable since 1 August 2014 (EEG 2014) financial support for renewable energy sources and mine gas and its specific amount shall be determined by auctions by 2017 at the latest. This is to make financial support more market-oriented and to meet the requirements of the EU Guidelines on State aid for environmental protection and energy 2014-2020 (EEAG).

Under the EEG 2014 support is mostly no longer granted as fixed feed-in tariff payments, but in the form of a premium paid on top of the market price for electricity for new renewable power plants (mandatory direct marketing, for more information please see here). Yet support for freestanding PV power plants is already auctioned to gain experience with tenders (for more information on the first tenders, please see here).

2. Technologies Subject to Auctions as of 2017

BMWi proposes individual auction designs for the different renewable energy sources.

So far BMWi suggests to carry out auctions only for onshore and offshore wind power and photovoltaics, the three sources that are meant to make the greatest contribution towards Germany’s renewable goals. Photovoltaics plants attached to buildings with a capacity of up to 1 MW shall also be excluded. They shall continue to receive support as provided in the EEG 2014. This has been criticized by the Federal Association of the Energy and Water Industry (BDEW) as “very restrained” (“sehr zurückhaltend”) in view of the fact that the fluctuating input of PV power plants already poses a problem for distribution grids.

With regard to the growth potential for hydro power and the small number of geothermal projects BMWi does not want to make financial support for these renewable resources subject to auctions. Support shall continue to be granted pursuant to the EEG 2014. This shall also be the case for biomass for the time being. BMWi, however, announced to examine in the coming months whether auctions for this renewable energy source will make sense.

3. Overarching Objectives for Tendering Support

BMWi stresses that the key point paper is guided by the following overarching principles.

  • Keep growth within the so-called expansion ‘corridors’ (Ausbaupfade): The EEG 2014 introduced expansion ‘corridors’ for the support of renewable power plants under the EEG so as to achieve steady growth in line with the government’s growth targets and avoid sharp cost increases.The individual corridor targets are as follows:
    – onshore wind power: annual growth of up to 2500 MW (net amount); capacity to be permanently decommissioned will be deducted from new capacity added;
    – 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;
    – solar power: annual growth of up to 2500 MW (gross amount); only new capacity counts, no deduction of capacity that has been decommissioned;
    – biomass: annual growth of 100 MW (gross amount); only new capacity counts, no deduction for capacity that has been decommissioned;
  • Promote competition and reduce costs to the necessary minimum;
  • Preserve the high number of acting entities in the renewable energy sector (hohe Akteuersvielfalt).

4. Timeline

Comments on the key point paper that includes many questions to stakeholders can be made to by 1 October 2015.

The EEG shall be amended to include the new provisions on auctioning financial support in 2016, BMWi sayd.

Source: Federal Ministry for Economic Affairs and Energy; BDEW

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