Economics and Environmental Ministers Jointly Propose EEG Amendment and Long-term Overhaul

After making differing proposals for a more or less fundamental amendment of the Renewable Energy Sources Act (EEG) lately, Federal Economics Minister Philipp Rösler and Environment Minister Peter Altmaier today presented a joint proposal for a short term amendment of the EEG to rein in the rising EEG related electricity costs as of 1 August 2013. Besides, they expressed their will to fundamentally alter the EEG in the long term.

The table below describes the measures envisaged and the expected cost savings. As there are no further explanations available yet, we leave the table basically uncommented, apart from referencing the applicable EEG Sections.

I. Measures to Stabilise the Electricity Prices Potenial Savings (EUR million 2014)
 1. EEG Power Plants 1,160
 1.1 Feed-in tariffs for new plants commissioned as of 1 August 2013 will be equal to the market value of electricity for the first five months following the commissioning, with the exception of PV power plants. 500
 1.2 Feed-in tariffs payable as of the 6th month after commissioning will be lowered for new plants as follows

– Onshore wind power: The initial tariff is reduced to 8 ct/kWh (presently 8.8 ct/kWh). The repowering bonus and the system services bonus will no longer be paid. The reference yield model will be modified with regard to the applicable time period.

– PV power plants: No changes planned. Tariffs are lowered according to the degression model set out by Section 20b EEG (so-called “breathing cap”)

– All other plants: One time reduction of 4%

The ministries point out that the reductions apply to plants starting operations on or after 1 August 2013.

 1.3 Market and grid integration:- EEG power plants commissioned before 1 August 2013 remain entitled to chose between the fixed feed-in tariff and the direct marketing option laid down in Sections 33a to 33h EEG (optional direct marketing). In cases in which grid operators may resort to manage the input to the grids (feed-in management; cf. Section 11 EEG), compensation for plants receiving feed-in tariffs shall be considerable lowered, whereas compensation for plants that market the electricity directly remain unchanged.

– EEG power plants that start operating as of 1 August 2013 are obliged to market the electricity themselves (mandatory direct marketing), except for plants with a capacity of below 150 kW. At the same time the management premium that is part of the direct marketing premium pursuant to Section 33g EEG will be abolished. The compensation for feed-in management measures by the grid operators remain the same.

 1.4 Contribution of existing EEG power plants to the target of limiting costs:

– The liquid manure bonus (Gülle Bonus), which was introduced with the EEG amendment of 2008 retroactively will be abolished as of 1 August 2013. The ministries point out that this applies to plants commissioned between 2004 and 2008.

– For all other existing plants commissioned before 1 August 2013 a 1.5% flat-rate reduction will apply in 2014 and is limited to that year.



2. Allocation of the EEG costs (resulting from the difference between the sale of the renewable energy at the energy exchange by the transmission operators and the fixed EEG payments) 700
 2.1 Special Equalisation Scheme for Energy-intensive Companies (resulting in a reduction of the so-called EEG surcharge for electricity consumers; cf. Sections 40 to 44 EEG)

– Deductible for privileged customers shall rise as of 1 January 2014

– Sectors which do not face significant international competition shall no longer be privileged

 2.2 EEG surcharge privilege for self-generated and self-consumed electricity (cf. Section 37 para. 3 sent. 2 EEG): A minimum EEG surcharge for these plants shall be introduced with the exception of plants with a capacity of less than 2 MW and CHP plants
 3. Total Savings 1,860
II. Measures to Implement the Concept to Stabilize the Electricity Prices
The EEG surcharge for 2014 shall be limited to the surcharge payable in 2013, i.e. 5.227 ct/kWh. It shall only rise by 2.5% annually in the following years.The EEG surcharge shall be evaluated annually in the monitoring report (presented by the Federal Network Agency), which shall contain proposals for action if necessary.The above measures shall be implemented by an amendment of the EEG effective as of 1 August 2013. Additional (cost reduction) measures shall avoid burdening only the industrial enterprises and grid operators.

In light of the upcoming federal elections on 22 September and the SPD/Green majority in the Bundesrat, it is doubtful whether the ruling CDU/CSU/FDP coalition will be able to find the necessary majorities for this proposal. In addition, the constitutionality particularly of the proposed 1.5% reduction of feed-in tariffs for existing plants in 2014 will surely be questioned.

Sources: Federal Ministry of the Environment, Nature Conservation and Nuclear (BMU): press release, position paper

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