Federal Council Stops Solar Feed-in Tariff Cuts and Invokes Mediation Committee

In today’s session the Bundesrat (Federal Council) did not follow the vote of the Bundestag (Parliament) of late March regarding a bill amending the Renewable Energy Sources Act (EEG), which intends to cut solar feed-in tariffs. Instead the Federal Council invoked the mediation committee of the Bundestag  (Federal Parliament) and Bundesrat to find an agreement. Because of a two-thirds objection, the bill is likely to be materially revised, as the CDU/CSU/FDP coalition government does not have the two-thirds majority that would be necessary to reject the Bundesrat’s objection by the Bundestag.

The Bundesrat criticised that the bill not only put the national targets for solar expansion into question, but jeopardised investment certainty for the whole industry, and was thus a danger to a large number of jobs. Besides, the hasty legislative procedure and the grandfathering rules contained in the bill were a threat to the protection of legitimate expectations (Vertrauensschutz) into the EEG, the Bundesrat said.

The decision by the Bundesrat shows that the last minute changes made before Parliament’s decision were not enough to convince the federal states. According to AFP, even some Eastern German states, which are run by coalition governments like the ruling CDU/FDP coalition government in Berlin opposed the bill in the Bundesrat. As said in the past, these states are home to important solar companies.

AFP quotes Thuringia’s Socialist Economics Minister as saying there was a great willingness to reach an agreement in the mediation committee, preferably by July.

To date, however, it remains unclear if, when and what kind of agreement can be reached. As we pointed out earlier, a lack of consent can in principle be remedied by another Bundestag’s vote in favour of the bill, as it is only a so-called Einspruchsgesetz (“objection law”), not a Zustimmungsgesetz (“consent law”) that expressly requires consent.

However, it appears as if the Federal Council objected with a two thirds majority (48 out of 69 votes). When the Bundesrat adopts the objection by a majority of at least two-thirds of its votes, its rejection by the Bundestag requires a two-thirds majority, including at least a majority of the Members of the Bundestag (Art. 77(4)(2) Basic Law). The information about the two-thirds objection was not contained in the Bundesrat’s official press release, and therefore originally was not reported widely. As the ruling CDU/CSU/FDP coalition does not have a two-thirds majority in the Bundestag, the Bundestag effectively cannot overrule the objection. This in turn means that the feed-in tariff reduction bill is likely to require material revisions during the mediation committee procedure to clear the Bundesrat’s objection hurdle.

It will be interesting to see if the deferred decision on solar cuts will induce more customers to bring forward their decision to install a solar power plant in view of further cuts. So far the German grid regulator has only published the data on new PV capacity for January and February (about 650 MW). In mid-April Financial Times Deutschland already speculated that March saw a record growth of roughly 1,100 MW.

(updated)

Source: Bundesrat; Welt Online/AFP; F.A.Z.

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