BMWi and BMU Reach Agreement Regarding Solar Feed-in Tariff Cuts and EU Energy-Efficiency Directive

In a joint press conference Minister Philipp Rösler (Federal Ministry of Economics and Technology – BMWi) and Minister Norbert Röttgen (Federal Ministry for the Environment, Nature Conservation and Nuclear Safety – BMU) presented plans for further solar feed-in tariff cuts and their common position concerning the EU proposal for a Directive on Energy Efficiency. In the past both ministers had expressed different views and ideas on the two topics.

The compromise involves a joint proposal for an amendment of Article 6 of the draft EU Directive on Energy Efficiency and solar cuts. The proposed amendment of the EU Directive on Energy Efficiency shall allows for more flexibility for the Member States in reaching the energy efficiency goal. The solar feed-in tariff cut shall not contain a hard cap, as initially demanded by Minister Rösler.

I. Proposal Concerning Solar Cuts

Solar power was a German success story, the ministers reiterated. In view of the strong growth in capacities, especially over the last two years, an amendment of the support scheme of the Renewable Energy Sources Act (EEG) was necessary. Otherwise it would be impossible to keep the EEG reallocation charge (also called EEG surcharge) stable and ensure that support for solar energy among the general public remained high.

With the EEG surcharge electricity consumers pay for the difference between the guaranteed solar feed-in tariffs and the revenue obtained by the sale of the electricity at the EEX energy exchange.

The aim is to make photovoltaics competitive within a period of a few years so that financial support was no longer necessary, Ministers Rösler and Röttgen stated.

The ministers suggested to cut solar support as follows:

1. One-time cut on 9 March 2012

Solar power plants shall be classified into three categories for which tariffs as below apply

a. Plants with a capacity of up to 10 kW: 19.5 ct/kWh

b. Plants with a capacity of up to 1,000 kW: 16.5 ct/kWh

c. Plants with a capacity of up to 10 MW: 13.5 ct/kWh.

Plants with a capacity of more than 10 MW shall no longer be eligible for feed-in tariffs.

2. Monthly Reduction of Feed-in Tariffs as of 1 May 2012

Feed-in tariffs shall be reduced monthly by 0,15 ct/kWh starting 1 May 2012 to avoid large additions of plants before the annual and mid-year reductions.

3. Limited Amount of Eligible Energy and Abolition of Self-Consumption Tariff

In order to promote market integration of PV installations only a limited share of solar energy shall be eligible for feed-in tariffs. Small roof-top installations up to 10 kW shall receive feed-in tariff payments for 85% of the energy generated in one calendar year, while all other installations shall receive payments for 90% of the energy, starting 1 January 2013 for all plants commissioned after 9 March 2012. This shall create an incentive for self-consumption of the energy exceeding the limit or for direct marketing. At the same time, however, the feed-in tariff paid for self-consumed energy from solar installations attached to or on top of a building or a noise protection wall with a capacity of up to 500 kW (Section 33 para. 2 EEG) shall be abolished.

4. Possibility to Issue Ordinance to React Faster to Market Developments – Adjustment of Target Corridor

A new possibility for BMU to issue ordinances in cooperation with BMWi shall enable the ministries to faster adjust monthly reductions and tariffs in case the solar expansion deviates from the target corridor of 2,500 to 3,500 MW annually. The target corridor itself shall decrease by 400 MW annually starting in 2014. In 2017 it shall range from 900 to 1,900 MW.

5. Tariff Amendment for Roof-top Installations

Roof-top installations on new buildings that are not intended for residential purposes shall (only) receive the same payments as freestanding installations.

6. Restricted Definition of “Commissioning of PV Installation”

The term “Commissioning of PV installation” shall be defined in a more restricted fashion, applying only to modules which are firmly attached and equipped with a PV inverter.

7. Further amendments

Further amendments relate to older PV installations, which shall also contribute to network stability (50.2 Hz problem) and an exemption of storage facilities from the EEG surcharge. Besides, the provision on feed-in management which allows network operators to take technical control over installations connected to their grid to avoid grid congestion shall also apply to solar installations with a capacity below 100 kW as of 1 July 2012.

8. Overview New Solar Feed-in Tariffs

The reductions would lead to the following feed-in tariffs:

Proposed New Solar Power Feed-in Tariffs
earlier reduction + continuity (0.15 ct/ month)
start of operation installed capacity rooftop installations  freestanding
NEW: up to 10 kW up to 100 kW (deleted) up to 1,000 kW above 1,000 kW to 10 MW  up to 10 MW
from 01.01.2012 24.43 23.23 21.98 18.33 17.94
from 09.03.2012 19.50 16.50 13.50 13.50
means reduction by 20.2% 29.0% 24.9% 26.4% 24.7%
monthly degression (ct) 0.15
from 01.05.2012 19.35 16.35 13.35 13.35
from 01.06.2012 19.20 16.20 13.20 13.20
from 01.07.2012 19.05 16.05 13.05 13.05
from 01.08.2012 18.90 15.90 12.90 12.90
from 01.09.2012 18,75 15.75 12.75 12.75
from 01.10.2012 18.60 15.60 12.6 12.60
from 01.11.2012 18.45 15.45 12.45 12.45
from 01.12.2012 18,30 15,30 12.30 12.30
from 01.01.2013 18.15 15.15 12.15 12.15
means reduction by (compared to 1.1.2012) 25.7% 31.1% 33.7% 32.3%
from 01.01.2014 16.35 13.35 10.35 10.35
means reduction by (compared to 1.1.2013) 9.9% 11.9% 14.8% 14.8%
from 01.01.2015 14.55 11.55 8.55 8.55
means reduction by (compared to 1.1.2014) 11.0% 13.5% 17.4% 17.4%
from 01.01.2016 12.75 9.75 6.75 6.75
means reduction by (compared to 1.1.2015) 12.4% 15.6% 21.1% 21.1%


II. Proposal Concerning Draft Energy Efficiency Directive

Regarding energy efficiency the ministers backed the EU goal to increase energy efficiency in the EU by 20% until 2020. They proposal is to amend Art. 6 of the Directive in such a way that binding targets are combined with a high level of flexibility regarding the implementation, which is in line with what Minister Rösler had called for in the past.

The joint proposal reads as follows: “The Member States determine that as of the year this Directive enters into force until 2020 energy efficiency shall increase by 6.3% within three years or energy consumption shall decrease by 4.5% within three years compared with a previous three-year reference period. For this purpose Member States submit an energy efficiency action plan containing measures relating thereto.”

The above proposals still have to be approved by the Bundestag (Federal Parliament) and the Bundesrat (Federal Council). As with a previous solar cut this may happen by including the proposals in other bills that are already well advance in the parlamentary legislative procedure. Yet implementation until 9 March 2012 remains a very ambitious goal.

Ministers Rösler and Röttgen emphasised that they wanted to successfully implement the energy shift and pointed out that laws supporting the energy policy shift like the Act on Measures Accelerating the Expansion of the Electricity Grids (NABEG) and the bill amending the Combined Heat and Power Act were already in force, respectively in the legislative process. Furthermore, financial support by the state-owned KfW development bank for offshore projects and energy-efficient renovations was available. Grid expansion was being monitored by BMWi in cooperation with BMU, they said. Besides, they announced to set up a BMU-lead new working group on renewable energy and a new steering group for the energy shift lead jointly by BMWi and BMU comprising the state secretaries of the Federal Cabinet. In view of differing opinions on energy-related aspects between BMU and BMWi there had been calls for an energy ministry by various interested parties in the past.

Sources: Press Release Federal Ministry for the Environment, Nature Conservation and Nuclear Power; Results Paper BMU/BMWi

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