German Renewable Energy Sources Act
The original legislation guaranteed a grid connection, preferential dispatch, and a government-set feed-in tariff for 20 years, dependent on the technology and size of project.
[6]: 439 The original EEG is credited with a rapid uptake of wind power and photovoltaics (PV) and is regarded nationally and internationally as an innovative and successful energy policy measure.
Specific deployment corridors now stipulate the extent to which renewable electricity is to be expanded in the future and the funding rates are no longer set by the government, but are determined by auction.
The current EEG has been criticized for setting the deployment corridors (see table) too low to meet Germany's long-term climate protection goals, particularly given the likely electrification of the transport sector.
[6]: 439 The law obliged grid companies to connect all renewable power plants, to grant them priority dispatch, and pay them a guaranteed feed-in tariff over 20 years.
The three principles of the act are: The compensation rates ... have been determined by means of scientific studies, subject to the provision that the rates identified should make it possible for an installation – when managed efficiently – to be operated cost-effectively, based on the use of state-of-the-art technology and depending on the renewable energy sources naturally available in a given geographical environment.Unlike the preceding Electricity Feed-in Act, feed-in tariffs were now specified in absolute terms and no longer tied to the prevailing electricity price.
The PV Interim Act (2003) raised photovoltaic tariffs from 1 January 2004 and in particular for small rooftop installations, to compensate for the ending of low-interest loans under the expiring 100,000 roofs program.
While the basic framework remained unchanged, this act introduced a substantially modified and differentiated tariff structure, to better match the economic viabilities of the technologies concerned.
In parallel to the EEG, a separate loan program of €5 billion was established, to be administered by the state-owned KfW bank, with the goal of reaching 25 GW installed capacity for wind by 2030.
New measures allowed grid operators to temporarily limit wind turbine output in times of network congestion, with compensation payable to the plant owner for lost remuneration.
The new EEG sought to advance the dynamic expansion of renewable electricity generation, control the rising costs associated with the scheme, and enhance market and grid integration, while adhering to the principles of a feed-in system.
[17] In 2013, after numerous complaints, the European Commission opened an in-depth state aid investigation into the EEG surcharge exemptions for energy-intensive companies and into the green power privilege.
The self-consumption privilege was removed for new installations, as grid parity was already met: the feed-in tariff for roof systems at 19.5 ¢/kWh was now lower than the average electricity price for households at 23 ¢/kWh.
In turn they receive a market premium from the grid operator to compensate for the difference between the fixed EEG payment and the average spot price for electricity.
[40] The flexible cap mechanism for expansion corridors was replaced with set annual targets for the addition of wind, photovoltaic, and biogas capacity.
The Federal Network Agency (Bundesnetzagentur) will call for tenders for renewable projects and set the capacity to correspond to the trajectory needed for a 40–45% share in 2025.
This centralised (Danish) model is designed to ensure competition and to make project approvals, site planning, and network connections more cost effective and better integrated.
[55] On 20 December 2016, the European Commission found that the EEG amendments are in line with EU rules governing state aid, thereby allowing the planned introduction on 1 January 2017 to be honored.
In January 2016, in response to the official proposals, Greenpeace Germany cautioned that a complete overhaul of the successful EEG would endanger climate protection targets.
Germanwatch, WWF-Germany, and Deutsche Umwelthilfe (DUH), three German NGOs, said the proposed reforms do not properly account for small, citizen-owned renewables projects.
As of 2016[update], under the EEG mandate, the Federal Network Agency (Bundesnetzagentur) publishes the currently installed PV capacity with adjusted feed-in tariffs monthly as a downloadable spreadsheet.
As history shows, the environmental coalition prevailed till 2014 at least, underpinning the development of the EEG legislation, the nuclear phase-out, and the German Energiewende more generally.
Earlier versions of the EEG could be interpreted as inhibiting free trade and that granting renewable energy preferential dispatch may still be illegal under the proposed treaty.
Various studies have found that a fixed feed-in tariff scheme provides financial certainty and is more cost effective and less bureaucratic than other forms of support, including investment or production tax credits, quota-based renewable portfolio standards (RPS), and auction mechanisms.
[74] Accounting for the external costs of fossil fuel use and thus "level[ing] the playing field" had been one of the key purposes when constructing the original EEG.
[7] A feed-in tariff scheme generates more competition, more jobs, and more rapid deployment for manufacturing and does not require the picking of technological winners, such as between wind power and photovoltaics.
"[58]: for quote [81][82][83] Analysis for Greenpeace Germany in 2016 also suggests that it is inflexible coal and nuclear plants that are clogging the grid and driving up wholesale electricity prices.
Greenpeace Germany observes "to reduce renewables to 45% in 2025 means expanding the fossil [fuel] share to 55%, with the aim of mitigating the impact on large utilities".
[58] Patrick Graichen from the Berlin energy policy institute Agora Energiewende agrees that the deployment corridors are set too low to reach renewables targets beyond 2025.
[58] A 2016 report by Volker Quaschning of HTW Berlin concludes that Germany will need to accelerate its renewables uptake by a factor of four or five to reach the lower 2015 Paris Agreement global warming target of 1.5 °C.
