German cabinet OKs EEG draft

The cabinet of Chancellor Angela Merkel today approved draft reforms of Germany’s Renewable Energies Act (EEG) that met with a cautious welcome from the wind energy industry, but were criticised sharply by the solar sector due to the introduction of a levy on self-consumption.

Merkel and her energy minister Sigmar Gabriel last week had reached a compromise with German states to soften the original reform proposal somewhat, making caps and cuts to onshore wind less severe.

The proposal still includes an annual cap of 2.5GW for the expansion of onshore wind, but the government now will only include the net addition resulting from repowering projects toward the cap, not the entire repowering capacity.

The draft also reduces onshore feed-in tariffs, but less steeply so for moderate wind inland locations than previously envisaged.

In accordance with the last draft, average onshore feed-in tariffs would be granted at €0.089 per megawatt hour for the first five years of operation and then periodically be lowered by a certain percentage, depending on the strength of the wind at each location.

“We can live with that,” Stefan Lütkemeyer, sales manager at Germany’s biggest supplier of onshore turbines Enercon, said at a panel at the Hanover industrial fair.

“But the discussion isn’t over yet. … If it comes like this (the reform), coupled with some improvements, we can build on it.”

Germany’s energy ministry says the Bundestag, the lower house of parliament, after discussing the draft is slated to vote on it at the end of June, while the Bundesrat, the upper house, should vote on it in mid-July.

The reformed EEG for the first time also stipulates a cap on the expansion of renewables' share of Germany’s electricity output of 45% by 2025, and of 60% by 2035, up from around 25% now.

The proposal also lowers the target for offshore wind to 6.5GW in 2020 from 10GW previously planned, and to 15GW in 2030, down from 25GW previously targeted. But Gabriel, in a compromise with the offshore industry, granted a “buffer” of another 1.2GW in grid connection approvals by 2020.

“That was absolutely necessary as the ‘overbooking’ is necessary to actually reach the 6.5GW,” Markus Rieck, sales director at Alstom in Germany, told Recharge.

“The grid capacity has to be expanded in order to create possibilities for other projects in development.”

The proposal also extends the so-called compression model for offshore FITs for another two years until end-2019. That gives operators of offshore parks the possibility to opt for higher FITs for the first eight years of operation in order to meet elevated initial investment costs.

The solar industry remained sour about the draft reform, however, as the proposal still expects to slap a surcharge to finance the expansion of renewables for the first time on self-consumed electricity.

According to the draft, energy-intensive industries will have to pay 15% of the levy that currently is set at €0.062 per KWh of produced electricity, while producers of renewable energies would be burdened with 50% of the surcharge. Small rooftop PV installations of up to 10kW will be exempt.

Germany’s Solar Energy Federation BSW Solar, which has repeatedly warned that a levy on self-consumption would choke off the already decreasing solar market in the country, appealed to lawmakers in parliament to erase the levy on self-consumption from the reform draft.

“This law hardly has anything to do with climate protection anymore,” BSW managing director Carsten Körnig said.

“Climate sinners are generously being exonerated, climate protectors meanwhile are being asked to pay.”