German Parliament Reduces Solar Feed-in Tariffs

After much debate and lobbying, the Bundestag (German Parliament) today passed an amendment of the Erneuerbare Energien Gesetz (Renewable Energie Sources Act – EEG). The amendment will lower solar-feed in tariffs considerably starting 1 July 2010. The reduction has been partly moderated compared to the reduction proposed in the Cabinet’s wording aide of 3 March 2010.

In 2009, the combination of falling prices for solar modules and high solar feed-in tariffs lead to a massive increase in solar generation capacity in Germany. Installed capacity for solar electricity generation increased from 5,979 MW at in December 2008 to 9,785 MW at the end of 2009.

The reduction of solar feed-in tariffs shall help to better control capacity growth in this area. As feed-in tariffs pursuant to the EEG are paid by the local grid operator, but passed on to the consumers, the reductions shall prevent excessive and unnecessary financial support and protect electricity consumers.

For installations attached to or on top of buildings, and installed after 30 June 2010, there will be an additional one-time reduction of 16%. For installations on conversion areas installed after 30 June 2010, the additional one-time reductions amounts to 11%, for other installations the reduction will be 15%. New installations on cropland erected after this date will no longer benefit from feed-in tariffs. Certain transitory provisions apply, in particular for facilities covered by a local development plan (Bebauungsplan) adopted (beschlossen) before 25 March 2010 and in operation before 1 January 2011.

Operators of solar plants may also receive feed-in tariff payments for electricity that is not fed inton the grid, but consumed near the plant. Electricity from installations with a capacity of up to 500 kW will be eligible for feed-in tariffs to the extent the operator or third parties uses the electricity in the immediate vicinity of the installation. For such installations, the applicable feed-in tariffs will be reduced by EUR 0.1638 for up to 30 percent of the generated power and by EUR 0.12 for the remaining power.  In order to benefit from this provision, solar installations have to be connected before 1 January 2012.

The amended EEG sets a target of additional solar capacities of 3,000 MW per year. If less additional capacity is connected, the annual degression will decrease. If new capacity exceeds this threshold, the yearly degression will increase. The actual decrease and increase in degression were changed compared to previous proposals.

According to reports in the recent past, the government wants to mitigate the effects of the solar feed-in cuts by an EUR 100 million solar research promotion scheme.

Further details about the new solar feed-in tariffs are available here.

Sources: Tagesordnung 40. Plenarsitzung 06.05.2010, Bundestags-Drucksache 17/1604, Bundestags-Drucksache 17/1147, AFP

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