German cabinet approves renewable energy law reform

German Chancellor Angela Merkel’s cabinet on Tuesday rubber-stamped changes to the country’s renewable energy law that will make solar power less attractive in the country.

While substantial exemptions remain for the industrial sector, domestic operators of renewable energy plants will be hit with a new financial burden by having to pay 50 percent of the country’s renewable energy surcharge – currently €0.624 per kilowatt hour. Renewable energy users were previously exempt from the surcharge, which is financing Germany’s green subsidies and clean energy transition.

Heavy industrial users of power, however, will only have to pay only 15 percent of the surcharge, even if the self-consumed electricity originates from fossil-fuel power plants.

In the new bill, economy and energy minister Sigmar Gabriel has sought to spread the financial burden of the renewable energy surcharge by including self-consumers, resulting in the new 50 percent surcharge for operators of RES and combined heat and power (CHP) plants. This would currently amount to €0.312 per kilowatt hour. Gabriel’s original plan called for an even higher surcharge of 70 percent for self-consumers, or €0.44 per kilowatt hour.

In seeking to keep heavy industry happy with affordable power while maintaining support for renewables, the bill would also require a 15 percent self-consumption surcharge for energy-intensive companies, irrelevant of the power source, for plants of more than 10 kW. Operators of industrial plants of up to 10 kW are exempted from the charge and allowed to self-consume a maximum of 10 megawatt hours per year. This regulation will remain valid for the subsidy program’s 20-year duration.

In addition, the bill includes PV plant installation target of 2,500 MW a year. In contrast to earlier drafts, a target range of 2,400 to 2,600 MW additional annual expansion above the amount of monthly degression will now be created. The new regulations would set a new base degression of 0.5 percent. If the range is exceeded by up to 900 MW, this will increase to 1 percent. The draft envisages subsequent tariff cuts of 0.4 percent. Should the range be undercut by up to 900 MW, the feed-in tariff would be reduced to 0.25 percent. The extent of the degression would be determined at the beginning of each quarter for the following three months.

The bill also includes an overall cap of 52 GW for solar subsidies and a pilot tender program for ground-mounted PV systems.

The renewable energy bill will next go to Germany’s Federal Parliament (Bundestag) and Federal Assembly (Bundesrat). Gabriel is looking to put the new law into effect by August 1.

Edgar Meza contributed to this report.

Translated by Kevin Campbell