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CDU/CSU/SPD Coalition Negotiations: Reform of Renewables Law for 2015?

After the first round of discussions on energy topics in the ongoing negotiations between the conservative CDU and CSU sister parties and the Social Democrats (SPD) to form the new German government, little specific information emerged. However, the parties reportedly strive to agree on a reform of the Renewable Energy Sources Act (EEG) by Easter 2014. Following Parliament and Federal Council approval the reform could then enter into force at the beginning of 2015, media reports say.

Under the EEG operators can currently chose between fixed feed-in tariffs, which are paid for a period of twenty years, or a so-called market premium paid for directly sold renewable energy, which basically provides for the feed-in tariff plus some premium. After the latest feed-in tariff adjustment [1] for solar feed-in tariffs, small solar power plants with a capacity of up to 10 KWp commissioned in November 2013 will for example receive a feed-in tariff of 14.07 ct/kWh. EEG-related costs have repeatedly been criticised as too high, driving up electricity prices and undermining the competitiveness of the German industry and hurting private households (regarding the EEG surcharge for 2014, please see here [2]).

The energy policy shift towards a renewable energy supply could be one of the main projects of the new coalition, key aspects could already figure in the coalition agreement, Frankfurter Allgemeine Zeitung (FAZ) quoted current Environment Minister Peter Altmaier, the chief negotiator for the CDU. “Corridors of agreement” (Einigungskorridore) had become visible, State Prime Minister of North Rhine-Westphalia Hannelore Kraft, who is leading the SPD delegation, said according to FAZ.

How exactly the potential coalition partners want to rein in EEG costs, however, remains unclear. Retroactive measures affecting existing renewable power plants, as Mr Altmaier had suggest in a proposal for an EEG amendment and long-term overhaul in February 2013 [3], were no longer considered, the newspaper Rheinische Post (RP) quoted an unnamed participant of the discussions as saying. According to the paper Mrs Kraft said that one still had to talk about immediately effective measure. Yet this would be difficult to implement, RP pointed out, saying in that case the CDU/CSU and the SPD had to amend laws by the end of the year, which appeared unlikely.

To increase energy efficiency both sides apparently strive for a compromise concerning tax relief for energy-efficient renovations for buildings.  A compromise is conceivable, RP quoted SPD Minister for European Affairs of the state of Baden-Württemberg, Peter Friedrich, as saying. An Act on Fiscal Measures Promoting Energy-Efficient Renovations of Residential Buildings formed part of the legislative package for the energy policy shift [4] of 2011. It aimed at promoting the energy-efficient renovation of residential buildings older than 1995 as of 2013 by giving tax incentives totaling EUR 1.5 billion, but was rejected by the Federal Council [5], which represents the interest of the sixteen German states on the federal level. A compromise could not be found in the Mediation Committee [6] of the Federal Council and Parliament so that the bill, which expressly required consent by the Federal Council (so-called consent law), could not become law.

Another topic in the coalition talks will be how to secure enough back-up energy for the fluctuating input of renewable energy. Various models like a strategic reserve and a capacity market have been proposed and discussed in the past.

Source: Frankfurter Allgemeine Zeitung [7]; Rheinische Post [8]

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