June 20, 2016

Renewable Energy Law Germany

Bill with Changes to Renewable Energy Law Passed by German Federal Government

In an 8 June 2016 resolution, the German Federal Government passed a bill making changes to the Renewable Energy Law (Erneuerbare-Energie-Gesetz), also called the EEG. The bill now goes to the Parliament (Bundestag) and Federal Council (Bundesrat) for review and formal adoption. The bill adopts a fundamentally new competitive procurement system to foster development of renewables and attain electricity production goals with renewables. Renewable production goals remain at existing levels—40 to 45 percent in 2025 and 55 to 60 percent in 2035.

Instead of the current fixed-rate compensation over 20 years, the bill calls for public procurement of large wind and photovoltaic facilities (above 1MW) under a “pay-as-bid” remuneration system in which offerors compete to build a facility. The German Federal Network Agency (Bundesnetzagentur) administers the solicitation and award process, and announces a “maximum price” in the solicitation. The lowest bid—meaning the bid requiring the lowest subsidy—will receive the award. From receipt of award, offerors have the specified time to complete the facility, but if completion is delayed the offeror pays liquidated damages for the delay period, as established in the solicitation.

To achieve these ambitious production goals from renewables, the bill establishes annual production capacities, which the Bundesnetzagentur will solicit. Depending on the type of renewable, these capacities vary.

• For Offshore wind, the bill calls for a production level of 6.5 GW by 2020 and 15 GW by 2030.
• For land-based wind facilities, the bill establishes an annual production increase of 2.800 MW for 2017, 2018, and 2019, and 2.900 MW annually thereafter.
• For Photovoltaic, the bill calls for an annual production increase of 2.500 MW annually, to come from 750-KW-production land and rooftop facilities.
• For biomass facilities, the bill calls for annual production increases of 150 MW from 2017 to 2019 and then 200 MW annually from 2020 to 2022.

The Bundesnetzagentur is responsible for registering the new facilities and recording the production increases.

Facilities generating electricity from water works and geothermal will continue to receive compensation at the fixed rates.

Passage of the bill by the Bundestag is expected in Summer 2016 with approval in the Bundesrat expected shortly thereafter.