Germany’s future renewables development will be governed by an auction system for most renewable technologies and the amount of capacity added per year will be streamlined with the necessary grid expansion, the government and state premiers agreed on Tuesday night. “We have not reached a precise and final agreement, but the outlines and orientation points are clearly recognisable,” said Chancellor Angela Merkel at a press conference.
In what Economy and Energy Minister Sigmar Gabriel said will constitute two “paradigm shifts,” the state premiers firstly agreed to the switch to competitive auctions for renewables support from 2017 on, instead of set feed-in tariffs. “Not the Bundestag will set the price in the future, but the market,” said Gabriel.
The Renewable Energy Act (EEG) has been the heart of Germany’s energy transition (Energiewende) – the shift to an economy based on renewable energy and no nuclear power – ever since it came into effect in 1990. Generous feed-in tariffs allowed for renewable technologies, like wind, solar PV and biogas, to expand considerably so that 30 percent of the country’s power generation came from renewables in 2015. But worries about the costs of renewable power and the EU Commission calling for market-based renewables support led the government in 2014 to prepare a switch to a tender model, in which the price paid for renewable electricity should be determined in auctions rather than by parliament.
The second paradigm shift would be to synchronise renewables development with the expansion of Germany’s power grid infrastructure, said Gabriel. Because a lack of new transmission lines had caused expensive grid congestion problems (see Factsheet re-dispatch costs), renewables, particularly onshore wind, would not be permitted to grow offhandedly anymore. Instead, an overall onshore wind expansion target of 2.8 gigawatts (GW) per year (gross) would be established, alongside special “grid congestions zones” in which only a reduced amount of new wind turbines would be tolerated. Some northern German states will have to restrict their wind development to about 60 percent of what they had built on average during the last three years, the minister explained.
With the building restriction in the congestion zones, the government hopes to both lessen the pressure on power network bottlenecks in times of peak wind power periods and give an incentive for states to enable fast grid expansion. “With this we will make sure that we are advancing the energy transition without blindly building new capacity and ending up paying twice – for the new wind turbines and the grid congestion,” Gabriel said.
Offshore, 15 GW of wind power capacity will be added until 2030. Regarding solar power, 2.5 GW of capacity are to be added per year, of which 600 megawatts (MW) will be auctioned. Small PV systems of 750 kilowatts (kW) capacity and less are exempt from tenders.
One day after the Tuesday meeting, the heads of Germany’s ruling coalition also found a solution for the contentious support for biomass plants, news agency dpa reports. They agreed on Wednesday night that biomass plants will take part in the new auction system for renewables. Biomass capacity should be expanded by 150 megawatts (MW) annually in the next three years and by 200 MW in the following three years. Economy minister Sigmar Gabriel said that biomass, as the most expensive renewable technology, could not be considerably developed while onshore wind, the most efficient technology, was curbed. The ministry suggested a 100 MW per year development target for biomass.
The federal government cabinet is to decide on the reform plans on 8 June, before the parliamentary process starts.
First reactions to renewable energy agreement
Here are some of the first reactions from public organisations, politicians and industry and workers’ associations to the government’s agreement with the state premiers on the Renewable Energy Act reform:
“The federal government filed climate change away,” say Oliver Krischer and Julia Verlinden, Green Party members of the Bundestag in a press release. “This way, Germany will miss its climate goals for sure. […] The world opts for renewables, only the former model student Germany steps on the brakes, thanks to the Christian and Social Democrats.”
The now agreed upon key points are “steps long overdue” to steer the Energiewende, says Ulrich Grillo, president of the Federation of German Industries (BDI), and criticises the opposition from some states: “By no means should state egoism be allowed to dictate the extent of future additional capacity [of renewable power].”
The wind power sector organisation German Wind Energy Association’s (BWE) president, Hermann Albers, welcomes the planning security that the agreement provides for the industry but criticises “the constant attacks against the top performer onshore wind.”
The key points on the EEG reform are a first step for more efficiency regarding the Energiewende, writes the German Chemicals Industry Association (VCI) in a press release. “Up until now, renewable energies in Germany were driven forward regardless of costs, supply security and grid development. Germany cannot afford a ‘Keep it up!’” said VCI managing director Utz Tillmann.
The World Wildlife Fund (WWF) Germany calls the deployment corridor of 2,800 MW of onshore wind power a “clear thwarting of the energy transition.” It was ineffective to “take hostage the renewables development for a dragged-out grid expansion,” writes WWF.
Michael Vassiliadis, the chairman of the IG BCE trade union for mining, chemicals and energy industries , welcomes that the “existing EEG principle ‘whatever the cost’ will be suspended,” according to an IG BCE press release. It would only be fair if the profiteers of the support system gave their share to advance the Energiewende, he (or the union) added.
The non-profit environmental and consumer protection association Deutsche Umwelthilfe (DUH) demands more efforts to use excess power from wind facilities in northern states for the heating and transport sectors instead of “nipping the Energiewende in the bud,” according to a press release.
The Association of Energy Market Innovators (bne) agrees: “We should not forget that the main task in the future will be to intelligently link the sectors’ electricity, heating and mobility,” says managing director Robert Busch.
Stefan Kapferer, head of the German Association of Energy and Water Industries (BDEW), welcomed the choice of an auction system and the deployment corridor for renewables as the right instruments to keep costs in check. He criticised the exemption of small PV installations of under 750 kW as still being too generous because it would prevent a majority of installations from having to compete in the market. Introducing a limit on new onshore wind power in the north of Germany would also raise costs as less efficient installations in the south would benefit from this rule, he added.
The German Renewable Energy Federation (BEE) criticises the “instrumentalisation of the grid development plan.” Managing director Hermann Falk says in a press release: “If the conventional power stations continue to congest the grid, renewables will not only be throttled. Their development will be clearly reduced.”
Greenpeace energy expert Niklas Schinerl comments on the government’s plans to slow down onshore development: “The federal government is treating the development of renewable energy like a toxic chemical that is digestible only in small doses. This way of thinking is absurd. […] With this reform, the Energiewende will be more expensive, slower and less secure.”