Germany: Severe renewable energy cuts planned

Federal Environment Minister, Peter Altmaier (Christian Democratic Union) and Federal Economics Minister, Philipp Rösler (Free Democratic Party) have presented their joint proposal to inhibit the expansion costs of renewable energy at a special meeting of Germany’s state representatives.

Both ministers agreed that short-term adjustments must be made to the EEG (renewable energy law). Separate to these proposed amendments are the plans to fundamentally reform the EEG.

Altmaier and Rösler have planned a raft of measures, which will primarily affect photovoltaic, wind and biomass plants that are grid connected from August 1, 2013. There are also retroactive cuts planned that call into question investment security.

According to the proposals, FITs for new wind and biomass plants should be reduced to the current market value in the first five months after commissioning. Photovoltaic plants will not be affected by this rule, or the plan to partially reduce tariffs on a one-off basis. Instead, photovoltaic tariffs should continue to be reduced on a monthly basis if installations exceed growth targets.

The ministers also propose changing the market and grid integration model. Under the plans, all plants that are grid connected before August 1 can continue to choose between fixed FITs and optional direct marketing. Meanwhile, all photovoltaic, wind and biomass installations bigger than 150 kW, which are connected to the grid from August 1, must sell the generated electricity directly to market. At the same time, states the joint proposal, the management premium received for directly selling electricity to the market should be abolished. The decision over feed-in management would remain unchanged.

Retroactive cuts

In a third proposal, the ministers have called for a contribution from existing installations to limit costs. Accordingly, allowances for all EEG plants, which are connected to the grid before August 1, 2013, should, for one year, be reduced to a flat rate of 1.5%. With this measure, Altmaier and Rösler aim to save €350 million. Furthermore, a minimum contribution for all self-consumption systems should be introduced. Exceptions would exist, however, for plants smaller than 2 MW, and for combined heat and power plants.

The proposals additionally outline an increase of the minimum contribution for privileged final consumption from January 1, 2014. Companies that do not compete internationally should no also longer be exempt from this special compensation scheme, which sees energy intensive companies paying a smaller EEG levy, according to the ministers.

They have further agreed to the freezing of the EEG levy until the end of 2014, and then to increasing it annually by 2.5%. The rate of the levy will be evaluated in a monitoring report, which may suggest recommendations for action.

Under other measures, unilateral burdens on both industry and network operators should be avoided. Overall, the ministers hope they will save a total of €1.86 billion. Additional savings are also possible, provided the EEG changes enter into force on August 1.

No deal

Thüringen’s Economics Minister, Matthias Machnig (Social Democratic Party of Germany), who attended the special meeting with the ministers, stated, "Thüringen rejects such an offer. We welcome the additional funding for solar research, but we will not barter – particularly as the research funds cannot compensate for the capping the solar subsidies."

On this point, he agreed with Germany’s solar industry – that the best research funding would be useless, if domestic photovoltaic companies are lost. "The Thüringen state government will, therefore, not support such a proposal," said Machnig after the meeting.

Germany’s Federal Solar Industry Association (BSW-Solar) also rejected Altmaier’s and Rösler’s proposal. "The Minister’s proposals won’t lead to any lasting relief for consumers, since they would massively slow down the energy transition," stated BSW-Solar director Carsten Körnig. He added, "They threaten to dissolve investment security and, hence, will abruptly stall the development of renewable energy."

The association leader called for a sophisticated, reliable policy, instead of the fifth set of legislative changes in just four years.

Translated and edited by Becky Beetz.