Ministerial Draft for Combined Heat and Power Act Amendment (KWKG 2016) Available – BDEW Critical

A ministrial draft for a recast of the Combined Heat and Power Act (KWKG) is now available on the internet. KWKG promotes power generated in CHP plants as well as heating and cooling networks and the respective storage facilities. The draft does not change the goal of a share of power generated in CHP plants of 25% by 2020, but contains many other amendments. They correspond mostly to the key points we informed about on 17 July 2015. The Federal Association of the Energy and Water Industry (BDEW) has voiced criticism and demanded changes.

1. Time Limitation of the New KWKG

The new KWKG is scheduled to enter into force on 1 Januar 2016 (KWKG 2016) and shall cease to apply by the end of 31 Dezember 2020.

According to Section 34 para. 2 KWKG 2016, the Federal Ministry for Economic Affairs and Energy will carry out a comprehensive evaluation in 2018 of CHP power generation in consideration of the government’s energy and climate goals, the objectives of KWKG 2016, the economic conditions for the operation of CHP plants and the annual CHP surcharges.

2. New Total Amount of  CHP Premiums and New Individual Premiums

Supporting CHP plants is one of the measures with which the government wants to save an additional amount of 22 million tonnes of CO2 by 2020.
With the exception of plants with a capacity below 100 kW, power from CHP plants has to be sold directly by plant owners in the future (so-called mandatory direct marketing). On the other hand, the new Section 29 para. 1 KWKG 2016 increases the total sum of CHP premiums paid in addition to the revenue obtained from EUR 750 million (cf. Section 7 para. 8 KWKG 2002) to EUR 1.5 billion per year.

Electricity from CHP plants which is fed into a grid for the general supply shall get more support for capacity from 250 kW to 2,000 kW and capacity above 2,000 kW than we reported on 17 July 2015 based on the information available at the time. According to Section 7 of the draft, support shall amount to

  • 8 ct/kWh for capacity up to 50 kW,
  • 5 ct/kWh for capacity over 50 kW up to 250 kW
  • 4.4 ct/kWh for capacity from 250 kW up to 2.000 kW
  • 3.1 ct/kWh for capacity above 2.000 kW.

In line with the government’s plans to reduce CO2, the above surcharges increase by an additional EUR 0.6 ct/kWh for capacity that replaces capacity in existing hard-coal or lignite powered CHP plants (certain conditions apply).

A 0.3 premium applies according to Section 29 para. 6 KWKG 2016 for CHP plants in the sense of Section 29 paras. 1 to 4 KWKG 2016 that fall under the Greenhouse Gas Emission Trading Act (TEHG).
There are also special paragraphs in Section 29 KWKG regulating the surcharge for CHP plants if power is not fed into a grid for the general supply. In that case only a limited number of plants receive support.
Existing CHP plants may also benefit from an EUR 1.5 ct/kWh premium if they fulfill certain requirements, e.g. a high efficiency rate (cf. Section 13 KWKG 2016).
In all the above cases, CHP premiums are only paid for a defined number of full-load hours.
For premiums for heating and cooling networks and heating and cooling storage facilities, please see Sections 4 and 5 of the draft.
Pursuant to a grandfathering clause contained in Section 35 KWKG 2016 support under the KWKG 2002 can still be claimed. A main precondition is a commissioning of the installation by 31 December 2015 (in certain cases a permit pursuant to Immission Control Law respectively a the start of construction is enough).

3. BDEW Criticism

The BMWi draft did not suffice to secure the CHP fleet and incentivise newbuild, BDEW commented. It did not make sense to exclude existing coal-fired power plants from support (under the KWKG 2016) despite the fact that they also helped to save CO2.

Source: BMWi, BDEW

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