New Ministerial Draft of Ordinance on Competitive Bidding for Financial Support for PV Power Redefines Suitable Land, Cuts Back on Volume

A revised ministerial draft of the planned Ordinance for Competitive Bidding for Financial Support of Freestanding Installations (FFAV) is currently being discussed. Compared with key points presented in July 2014 and a first internal draft by the ministry of October 2014, the update enlarges the land considered suitable for PV power plants that want to participate in the auctioning process as of 2016, but cuts back regarding the volume of the auctions. Instead of 600 MW annually only 400 MW shall be auctioned on average in the period 2015 to 2017.

1. Background Information

The FFAV shall regulate competitive bidding of freestanding PV installations for financial support under the Renewable Energy Sources Act in the years 2015 and 2017. The ministerial draft dated 15 January 2015 now contains 101 pages and has been published by online magazine

On 23 July 2014 the European Commission approved an amendment of the Renewable Energy Sources Act (EEG) that entered into force on 1 August 2014 (EEG 2014). In its decision, the Commission pointed out that the German support regime needed to comply with the Guidelines on State Aid for Environmental Protection and Energy 2014-2020 (EEAG), which foresee that “during a transitional phase covering the years 2015 and 2016, aid for at least 5% of the planned new electricity capacity from renewable energy sources needs to be granted in a competitive bidding process on the basis of clear, transparent and non-discriminatory criteria” before competitive bidding processes become eventually mandatory (with limited exceptions) as of 2017 (cf. paragraph (126) EEAG).

In accordance with the guidelines the EEG stipulates that in a first step support for freestanding solar power plants shall be determined by auctioning (Section 55 EEG). With these pilot projects the government and the competent authorities want gain experience with this new instrument, before the auctioning system shall in principle become mandatory in 2017 for all kinds of renewable energies. Therefore Section 88 EEG 2014 authorises the government to issue an ordinance that regulates the details of the auctioning procedure.

2. Most Important Changes of the Update

The ministerial draft now covers 101 printed pages. The EEG 2014 with its 104 Sections already brought a lot of additional provisions. It looks like the new FFAV will have 38 sections – more than three times the 12 Sections of the original EEG 2000.

We would like to point out what appear to be the two most important changes of the update.

a. Cut Back on Auction Volume and Timeline

While the update keeps the three auctioning dates in April, August and December (only moving the 2015 April date from 1st to 15th April), the average auctioning volume in the years 2015 to 2017 is reduced from 600 MW per year to 400 MW on average (with 500 MW being auctioned in 2015, 400 MW in 2016 and 300 MW in 2017). In the October 2014 proposal a higher 600 MW limit was chosen as experience with auctions in other countries showed that a certain amount of projects would not be implemented, the Federal Ministry of Economic Affairs and Energy, responsible for the matter, said at the time. Now the draft says that due to the uncertainty about the implementation of projects, 500 MW shall be auctioned in 2015 to reach the PV target (2,500 MW net per year, cf. Section 3 no. 4 EEG 2014) and comply with EU Guidelines (cf. draft, page 39). Capacity not used can be carried over (cf. Article 1, Section 4 draft).

b. Land Suitable for PV Power Plants Taking Part in Auctions

According to the update bids can not only be made for freestanding solar power plants on sealed surfaces, conversion areas and near railways and motorways, but also as of 2016 (cf. draft, pages 2 and 36) on land managed by the Federal Institute for the Management of Real Estate (Bundesanstalt für Immobilienaufgaben) and annually 10 projects on land that is located in a less-favoured farming area as defined by directive 86/465/EEC concerning the Community list of less-favoured farming areas within the meaning of Directive 75/268/EEC for Germany.

In the past the German Farmers’ Association had lobbied against new PV installations on farmland and other greenfield sites. Instead, they requested to keep the current restrictions, limiting freestanding PV installations mainly to plots of land already sealed and land previously used for economic, transport, housing or military purposes. However, without a softening of the restrictions, it may not be possible to effectively secure enough properties on which PV power plants can be built using a competitive bidding process.

With this combination of PV support and farming support, it looks like the new eligibility criteria in the planned FFAV may have also formally brought together two very sophisticated proponents of support schemes. It will be interesting to see how this alliance will promote the goal of more affordable, renewable energy in the future auctioning scheme.


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