90% Agreement on Key Points of the Renewable Energy Act 2016 Reform

Cabinet members and state premiers have reportedly agreed on key points of the Renewable Energy Act 2016 reform (EEG 2016). According to Chancellor Angela Merkel, final agreement has not been reached yet, but outlines and orientation points are clearly recognisable. Energy minister Gabriel said that agreement was reached on 90% of the issues.

1. Background

The Ministry for Economic Affairs and Energy is working on a reform of the German Renewable Energy Act (EEG). The reform aims to implement auctioning as the standard system to establish support levels for renewable energy, starting mainly in 2017. Auctioning shall not only lead to lower cost of renewable energy, but also ensure that growth stays within (and exceeds) the statutory expansion corridor.

The consulting process on the 2016 revision took place in April 2016 and left several points of conflict. On 12 May 2016 an extraordinary conference on the EEG draft took place between Chancellor Merkel and the state premiers. The parties separated without results. Tuesday’s meeting was to resolve open issues to push forward the process.

2. Points of Consensus

A detailed protocol of the meeting has not yet been released. Press reports on exact details of the agreements are still vague in important areas. Based on press statements of Cabinet members, the parties appear to have reached a consensus on several points:

  • Expansion corridor set as share of renewable energies on electricity generation shall remain at 40 to 45% until 2025.
  • New onshore wind capacity shall be limited to 2,800 megawatts (MW) gross per year (so far 2,500 MW) starting 2019, equivalent to about 1,000 wind turbines. The replacement of old wind turbines by new ones (repowering) shall be included. In light of grid bottleneck in the north, northern German states will have to restrict their development to about 60% of what they had built on average during the last years. On June 2017, support levels shall be reduced by an additional 5% to ensure that new capacity does not exceed the corridor (as it has previously). If that proves insufficient to maintain growth in the corridor, further reduction shall be possible.
  • 2,500 MW of solar energy shall be developed per year.
  • 600 MW PV capacity shall be put out to tender annually. Smaller pants and rooftop solar panels shall continue to receive the existing support, without auctioning.
  • Support for distributed generation through avoided grid fees (vermiedene Netzentgelte) shall be reduced over time, starting with renewable energy.

There is still no consensus on expansion of biomass, due to a dissenting position from Bavaria. Bavaria is requesting 250 MW of additional biomass based generation, instead of the currently planned 100 MW. This would lead to considerable additional costs.

The press statements so far do not provide a lot of detail on important points. It therefore remains to be seen what exactly was agreed on, and how it will translate into future legal provisions.

3. Next Steps

According to the government’s press release, a final Cabinet decision shall be taken on 8 June.

Source: Federal Government

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