Just in time for the 20th anniversary of its entry into force, the Renewable Energy Sources Act (EEG) is to be fundamentally amended. The “EEG Amendment 2021” will come into force on January 1, 2021 according to the current plans of the legislature. The expansion of EEG systems – i.e. wind energy, solar and biomass systems – is to be given a new boost in order to achieve the ambitious climate protection goals.
The declared aim of the 2021 EEG amendment is to create the legal requirements so that all electricity produced in Germany will be greenhouse gas-neutral (at the latest) by 2050. As an interim goal, 65 percent of electricity consumption in Germany in 2030 should come from renewable energies. In addition to steps that are undoubtedly to be welcomed, the new edition of the EEG also contains regulations that are likely to be a thorn in the side of project developers and operators of future EEG systems.
Increase in expansion targets
Above all, the considerable increase in the legally stipulated expansion volumes for EEG systems is to be rated positively. In total, EEG systems with an installed capacity of almost 200 GW are to be built in 2030. In the case of solar systems and offshore wind energy in particular, the currently installed capacity would more than almost double if the new legal targets were achieved. Even for onshore wind turbines, the new expansion target corresponds to a planned increase of around a third of the currently installed capacity.
However, it is also clear that the setting of a new expansion deposit through the EEG amendment 2021 can only contribute to increasing the expansion of EEG systems. The legislature expressly recognizes this in its reasoning for the EEG amendment 2021. The 65 percent expansion target can only be achieved with a joint effort by all actors in the federal, state and local governments. The new regulations would have to be accompanied in particular by adjustments to planning, licensing and nature and species protection law. This is certainly true.
In particular, the expansion of onshore wind turbines has not stalled in recent years due to insufficient statutory expansion targets. Rather, project developers had to struggle with considerable hurdles in the case of lengthy approval procedures and acceptance problems among the population. In order to improve the acceptance of wind turbines in the local communities, the EEG amendment 2021 provides for a financial contribution by the respective community of 0.2 cents per kWh of electricity production. With the current system sizes (approx. 3.3 MW installed capacity) and an assumed utilization of approx. 3500 hours per year, the municipalities received annual payments of approx. 23,000 euros per system. It remains to be seen whether the acceptance of the citizens concerned can be bought at the price of such participation.
Some of the new regulations met with clear criticism from stakeholders even before the official announcement of the 2021 EEG amendment. In particular, the established expansion path is criticized as inadequate. Electricity consumption in 2030 will be significantly higher than assumed by the federal government. The 65 percent expansion target can therefore only be achieved if the EEG systems are expanded even further.
Amazingly, another new regulation, which in practice is likely to lead to a not insignificant reduction in funding for future EEG systems, has so far received little attention in the public debate. The new regulation stipulates that the promotion of electricity production from future EEG plants will not be granted in certain periods of time, namely if the exchange electricity price is negative within a 15-minute interval. The discontinuation of subsidies in the event of negative electricity prices is not entirely new. With the amendment of the EEG in 2014, it was planned to discontinue the subsidy if the electricity price on the exchange is negative for at least six consecutive hours. This regulation generally applies to systems that were put into operation on or after January 1, 2016.
Hours with negative electricity prices, even in six consecutive hours, are no longer an absolute exception. The current regulation therefore already leads to significant revenue losses for operators of EEG systems. In the case of large systems, such as offshore wind farms, the loss of income can reach several million euros per year and park. Funding for future EEG systems would already be dropped every hour with negative electricity prices due to the new regulation. This presents project developers with considerable challenges. Income from power generation is becoming increasingly uncertain and difficult to plan. This could also have a negative impact on financing terms. Such regulations do not support a cost-efficient expansion of the EEG systems.
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