German govt must “promptly” adopt renewables support reform – environment minister
Clean Energy Wire
Germany must adopt reforms to the existing support schemes for renewable energy “promptly”, German environment minister Carsten Schneider said at a press conference in Berlin. The introduction of so-called Contracts for Difference (CfDs) will be an important step in supporting renewables expansion, Schneider said.
The environment minister emphasised that energy costs have to be reduced and that investment conditions have to be secured, in order for the renewable energy expansion to proceed “fast and cheap”.
“That means a further development of the support design and a transition to contracts for difference to reduce total costs”, Schneider said.
CfDs as state support for renewables aim to keep electricity prices low and create more financial stability by ensuring a fixed price level for electricity. If the market electricity price is below the fixed price level, the state will compensate electricity providers for the difference. In contrast, if the market price is above the fixed price level, providers have to repay the difference to the state.
In expressing his support for the introduction of CfDs in Germany, Schneider is following EU guidelines that oblige member states to adopt new rules on renewables support by 1 January 2027. The EU prescribes that support mechanisms should have a repayment-clause, requiring electricity providers to repay government funding at times of high market electricity prices. The EU guidelines stipulate that CfDs can be adopted to achieve this, but that “equivalent schemes with the same effects” are also allowed.
Guaranteed feed-in support payments for renewable energy projects have been at the heart of Germany's energy transition since they were introduced in 1990, and have been emulated across the globe. Renewables are now the cheapest form of generating electricity, and the fastest growing power source in the country. As their share in the electricity mix grows, the country has to figure out how to bring integration costs down while continuing to spur investments.
Schneider also called renewables “security energy” for Germany. As nationally-produced energy carriers, they make the country less dependent on resource imports from across the world, the minister said. “They are less vulnerable to attacks from the outside.”