EEG 2.0: Commission Approves EEG 2014 Paving Way for Entry into Force in August

Published on July 24, 2014 in Biomass, Electricity, Environmental Politics, Europe, Geothermal, Legislation, Renewable, Solar, Water and Wind. 9 Comments Tags: , , .

The European Commission has found the amended German Renewable Energy Source Act (EEG 2014 or EEG 2.0) to be in line with the Energy and Environmental State Aid Guidelines adopted in April 2014.  “The EEG 2014 will further EU environmental and energy objectives without unduly distorting competition in the Single Market”, the Commission said, paving the way for the entry into force of the Act on 1 August 2014. Approval has, however, been partially limited in time.

1. Background

While Germany in the past had maintained that the EEG does not constitute state aid, it notified the EEG 2014 to the European Commission (SA.38632 EEG 2014 / 17 April 2014) while the parliamentary process was still ongoing, already under the new Guidelines on State Aid for Environmental Protection and Energy 2014-2020. These Guidelines were officially published on 28 June 2014 in the Official Journal, and are applicable as of 1 July 2014.

2. Main Amendments, Grounds for Approval and Approval Periods

a) Mandatory Direct Marketing

Contrary to the EEG 2012, the majority of new renewable power plants will not receive fixed feed-in tariffs for renewable energy fed into the grids under the EEG 2014. Instead producers of renewable electricity will be obliged to sell on the market (for exceptions, please see below). They will obtain support in the form of market premiums paid on top of the market price for electricity. Until 31 December 2016 the market premiums will be determined by reference to administratively set reference values. The Commission therefore approved support to renewable electricity until 31 December 2016.

b) Tendering Financial Support Under the EEG

For solar installations on the ground, a pilot tender shall be organised starting in 2015 (for more information, please see here), which shall determine the level of the premiums and allocation of the aid between participants to the tender. As of 2017, tenders determining financial support under the EEG shall be the general rule. They will be opened for up to 5% of the tendered capacity to installations located in Member States which have concluded a cooperation agreement with Germany. As the Commission points out a new law is required to introduce the tenders. This is why the Commission only granted approval for the support of mandatory direct marketing (see above) until 31 December 2016.

c) Financial Support Pursuant to the EEG for Small Installations

Small installations (below 100 kW) will continue to benefit from feed-in tariffs and are not obliged to sell on the market. This part of the EEG 2014 was approved by the Commission for 10 years.

d) EEG Surcharge Reduction for Energy-intensive Users and Auto-generators

The Commission’s decision also addresses EEG surcharge reductions for auto-generation. The Commission points out that the support system under the EEG 2014 is financed from the EEG-surcharge that is to be paid by suppliers in respect of the electricity supplied to end consumers in Germany and by auto-generators (i.e. electricity producers for self-consumption). Ultimately the surcharge has to be paid by end consumers to which it is passed on.

The Commission considers the reductions provided for energy-intensive users under the EEG 2014 compatible with the Guidelines on competitiveness grounds, “since the sectors are both electro-intensive and exposed to international trade”.

Reductions for auto-generators also granted under the EEG 2014 were approved by the Commission as follows:

  • For small installations as they are below the de minimis threshold;
  • For auto-generators using renewable energy sources since they are considered in line with the logic of the EEG-surcharge system;
  • Reductions for auto-generators which are energy-intensive are also deemed allowed under the Guidelines;
  • For other types of installations, the reductions will need to be reviewed and eventually adapted to the requirements of the Guidelines, the Commission said. It remarked that “Germany has committed to review them in due time and re-notify amendments to the Commission by 2017. On that basis the Commission could also conclude that the exemptions and reductions granted under the EEG 2014 to auto-generators were in line with the Guidelines. The yearly budget of the reductions is estimated at around EUR 5 billion.”

3. In-depth investigation into EEG 2012

Regarding the in-depth investigation opened by the Commission in December 2013 on the EEG 2012 Act (see IP/13/1283) raising doubts in particular about the compatibility of the reductions for energy-intensive users, the Commission informed as follows:

“This investigation is distinct from the procedure concerning the EEG 2014. The EEG 2012 case will be assessed on the basis of the new Energy and Environmental Aid Guidelines. Germany has already submitted the main elements of the adjustment plan mentioned under paragraph 196 of the Guidelines.”

4. Full Text of Decision

The non-confidential version of the Commission’s decision is not yet available and will be made available under the case number SA.38632 in the State Aid Register on the DG Competition website once any confidentiality issues have been resolved. As always, new publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.

Source: EU Commission; Federal Ministry of Economic Affairs and Energy 

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by Mutthias Leng and Annute Leng

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