Federal Network Agency Sets New Rules for Efficient Marketing of Renewable Energy

The Equalisation Scheme Execution Ordinance (AusglMechAV) was published today. The ordinance further develops rules for marketing renewable energy which network operators have to buy pursuant to the Renewable Energy Sources Act (EEG).

The full name of the new Equalisation Scheme Execution Ordinance is “Ordinance for the Execution of the Ordinance on the Further Development of the Nationwide Equalisation Scheme” or, in German, Verordnung zur Ausführung der Verordnung zur Weiterentwicklung des bundesweiten Ausgleichsmechanismus (Ausgleichsmechanismus-Ausführungsverordnung – AusglMechAV). It was enacted by the Federal Network Agency (Bundesnetzagentur) with the approval of the Ministry for the Environment, Nature Protection and Nuclear Safety. The ordinance will enter into force on 27 February 2010.

The equalisation scheme goes through five steps:

  1. Renewable energy generator (wind farm, solar park, etc.)
  2. Distribution system operator
  3. Transmission system operator
  4. Electricity supply undertaking
  5. Consumer

Details of the current equalisation scheme are in principle contained in the AusglMechV, which entered into force on 1 January 2010. The AusglMechAV now builds upon the AusglMechV.

The AusglMechV was an important step to create more transparency for the sale of renewable energy. Previously, transmission system operators had to physically take on the renewable energy that they got from  the distribution system operator, who got it from the generator (physical equalisation).  Under the AusglMechV, transmission system operators have to sell their renewable energy at the spot market (financial equalisation).

Revenues from the spot market sale of renewable energy do not cover the feed-in tariffs payable pursuant to the EEG and the so-called profile service costs (Profilservicekosten). In fact, prices at the spot market have been negative at times. To ultimately pass on the costs of the transmission network operator to the consumer, the deficits from the spot market sales are first allocated to the electricity supply company as the so-called “EEG reallocation” (EEG-Umlage). The EEG reallocation is estimated to amount to EUR 8.2 billion in 2010, or 2.047 ct/kWh. The electricity supply company then passes it on to the consumer.

The equalisation scheme is rather complex. Since market participants still have to get used to the new marketing channel for renewable energy via the spot market, the new AusglMechAV stipulates  for 2010 that network operators are not required to sell at any price. In certain limited cases, they are allowed to set price limits.

The new ordinance also provides an incentive for grid operators to reduce profile service costs, especially for balancing the grid. Network operators benefit from savings as a result of efficiency increases. Three-quarters of the efficiency gains will go to the consumer via lower EEG reallocation costs, grid operators can keep the remaining quarter.

In addition the regulation contains further provisions which enhance transparency, e.g. stipulations requiring that separate accounts are administered, and provides the option to assign EEG marketing to third parties.

Sources: Federal Network Agency, Federal Law Gazette (Bundesgesetzblatt) I 2010, page 134

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