European Commission approves German renewable energy law
The European Commission has
rubber-stamped Germany's new Renewable Energy Act (EEG) after finding it to be
in accordance with EU state aid rules.
The revamped law, which will regulate
support to renewable electricity through 2016, provides support for production
of electricity from renewable energy sources as well as from mining gas. It also
reduces the financial burden on energy-intensive users and certain
auto-generators by reducing their level of payment of the renewable energy law
The EC found that the act provides that
“aid will be progressively alloEuropean Commission approves German renewable
energy lawcated through tenders, which will gradually be opened to operators
located in other member states.
"The Commission has concluded that the
EEG 2014 will further EU environmental and energy objectives without unduly
distorting competition in the single market," the Commission said in a
Joaquín Almunia, the Commission vice
president in charge of competition policy, added: "The EEG 2014 paves the way
for more market integration of renewables. In the medium term this should lead
to lower costs for consumers. Also, the progressive opening up of tenders to
operators located in other Member States is a very positive development for the
internal energy market."
The government of Chancellor Angela
Merkel presented the draft law in April. It will now go into effect August
Germany's annual yearly budget for the
support of renewable electricity is estimated at some €20 billion.
Producers of renewable electricity will
now have to sell on the market and they will receive support in the form of
market premiums paid on top of the market price for electricity. Market premiums
will be determined by reference to "administratively set reference values"
through 2016. The law also calls for a pilot tender program for ground-mounted
solar installations that will determine the level of the premiums and allocation
of aid to tender participants. As of 2017, tenders are to be generalized but a
new law will be required to introduce them.
Small installations (below 100 kW) will
continue to benefit from feed-in tariffs for the next 10 years and are not
obliged to sell on the market.
Germany's renewable energy subsidy
program is financed by 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). The law
provides reductions for energy-intensive users in sectors that meet certain
criteria in an effort to maintain competitiveness in German
Reductions are also granted under the
EEG 2014 to certain auto-generators. Reductions for auto-generators using small
installations are allowed as they are below the so-called "de minimis
threshold." Reductions for auto-generators using renewable energy sources are
also allowed since they are in line with the logic of the EEG-surcharge system.
Auto-generators that are energy-intensive will also be eligible for
The Germany government is to review the
possibility of reductions for other types of installations "in due time" and and
eventually amend the law if need be.
The yearly cost of the reductions is
estimated at around €5 billion.
In addition, instaallations located in
EU member states that have concluded a cooperation agreement with Germany will
be able to bid for up to 5% of the tendered capacity as part of the planned
The Commission noted that such
cooperation agreements ensure that electricity produced in another member state
that would obtain German subsidy support would count towards Germany's renewable