The Renewable Energy Sources Act (Erneuerbare Energien Gesetz – EEG) promotes renewable energy mainly by stipulating feed-in tariffs that grid operators must pay for renewable energy fed into the power grid. The latest EEG amendment (EEG 2012) dates from 20 December 2012. The Federal Ministry provided non-binding English translations of the 2009 version, a version containing the 2010 amendments, as well as the version applicable on 1 April 2012.
According to Section 1 para. 1 EEG 2012, the purpose of the law is to facilitate the sustainable development of energy supply, particularly for the sake of protecting the climate and the environment, to reduce the costs of energy supply to the national economy (also by incorporating external long-term effects), to conserve fossil fuels and to promote the further development of technologies for the generation of electricity from renewable energy sources. To this end, the Act aims to increase the share of renewable energy sources in the German electricity supply. According to Section 1 para. 2 EEG 2012, renewable energy shall account for 35% of the electricity production by 2020, for 50% by 2030, for 65% by 2040 and for 80% by 2050.
Feed-in tariffs are paid for energy generated from the following sources:
- Landfill gas, sewage treatment plant gas and mine gas
- Geothermal energy
- Wind power
- Solar radiation, e.g. soloar photovoltaic, solar thermal
The feed-in tariffs vary with the generation capacity of the installations and the type of renewable energy source. In principle, they drop annually by a pre-determined degression rate, so as to take account of cost decreases for installations and parts and to encourage technological advancements. EEG 2012 makes various adjustments with respect to the tariffs. An overview of (meanwhile changed) tariffs, degression and sample calculations pursuant to the EEG 4 August 2011 can be found here.
For solar generation, the EEG 2009 originally provided for an annual decrease that can be adjusted 1 percentage point up or down. However, due to the very high rate of additional solar projects and decreased cost of solar installation, two additional reductions took place in July and October 2010. The rates for 2010 are available here.
A potential reduction under the EEG 2009 in July/September 2011 did not come into effect as the capacities that would have triggered the reduction were not reached. EEG 2012 modifies the degression for PV tariffs insofar that the new Section 20a para. 5 EEG extends the possible capacity based additional mid-year reduction beyond 2011. At the beginning of 2012 PV feed-in tariffs were reduced by 15%. The addition of new capacities in late 2011 triggered another mid-year reduction as new capacities at the beginning of 2012 also influenced the reduction rate.
As it turned out to be difficult to adjust the PV feed-in tariffs to the quickly changing prices in particular for PV modules, the tariff adjustment system for solar generation was changed as of April 2012. The system goes by the name of “breathing cap” (atmender Deckel) an leads to monthly adjustments of the PV feed-in tariffs. When the applicable expansion corridor is exceeded, a sliding scale of fixed percentage reductions shall apply. Depending on newly installed capacity in preceding months, the reduction for the following three months is determined. The adjustments take place every three months and are valid for a three-month period. A recent example for the calculation and the resulting PV feed-in tariffs can be found here.
Pursuant to the German Energy Industry Act (Energiewirtschaftsgesetz – EnWG), grid operators are legally obliged to provide access to the grid for all interested energy generators. The grid operators can pass the feed-in tariff costs on to the end-consumer.
The EEG only regulates the renewable electricity sector. The Renewable Energies Heat Act (Gesetz zur Förderung Erneuerbarer Energien im Wärmebereich – EEWärmeG) promotes the increase of heat generated from renewable energy to 14% by 2020.