RECAI: Country focus

Germany

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The waiting ends. Late 2013 brought Germany a much-awaited coalition government. Early 2014 brought it a much-feared renewables reform package.

The coalition agreement was swiftly followed by a decision to bring energy policy under the economy ministry’s remit, showing the new Government’s priorities. In December, Sigmar Gabriel became Germany’s new Minister of Economics and Energy, and in January he rewrote Germany’s energy future.

Scaling down. The Government’s proposals include the following technology-specific reforms:

  • Fall in the average FIT across new renewable energy plants from €0.17/kWh (US$0.23) to €0.12/kWh (US$0.16), from 2015
  • Reduction in support from 2015 for onshore wind projects of 10%–20% on 2013 levels: the current onshore wind FIT average is €0.09/kWh (US$0.12)
  • An annual flexible cap of 2.4GW–2.6GW for new onshore wind installations, beyond which subsidies will fall 0.1% per 200MW
  • The reference level for annual installations of new solar PV plants reduced from 3.5GW to 2.5GW
  • From 2017, annual tenders of up to 400MW of ground-based PV arrays (to be extended to other technologies if successful)
  • Annual cap of 100MW for new biomass plants
  • “Compression tariff” for offshore wind extended to 2019, but initial tariff reduced by €0.01/kWh (US$0.01) in both 2018 and 2019. The current initial FIT is €0.19/kWh (US$0.26).
  • Reduced national target for offshore wind from 10GW to 6.5GW by 2020, and from 25GW to 15GW by 2030. Post 2020, tenders may be used to allocate the buildup of offshore wind capacity.Non-technology-specific measures include:
  • A cap on overall renewable electricity generation of 45% by 2025 and 60% by 2035
  • Self-consumption of power by operators of both renewable and conventional energy plants will pay 70% and 90% respectively of the surcharge paid by consumers for grid-based power
  • “Direct marketing” (the sale of power on the energy exchange) will become mandatory for all new renewable energy plants from 2017, with a phased reduction in the threshold from 5MW to 100kW in the meantime. The additional “management” payment currently received for voluntary marketing will also be scrapped.

Homemade energy.The measure attracting the most criticism is the call for firms producing their own energy to start paying a significant portion of the surcharge that funds renewable energy subsidies. For self-consuming renewables plants, this would translate to an extra €0.044/kWh (US$0.06). Exemption from this surcharge to date has prompted industry to generate 25% of its own power, and hundreds of thousands of companies and homeowners to install solar panels to reduce energy bills. Critics claim it will alienate ordinary citizens from the energy transition.

Going round. But looking at the numbers can also send you round in circles. True, self-consumption has helped lower the cost of the Government’s energy program because it reduces the amount of power sold into the grid at above-market rates. But, do such exemptions, which also cover energy-intensive industries, also inflate the fee for other consumers and businesses, leading to soaring energy prices? The bottom line does not yet seem clear.

Also in this article:

  • Just the start
  • Fighting talk
  • Puzzled reaction
  • The €5b question

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Local office contacts:

   Frank Matzen

   Thomas Christiansen