German Renewable Energy Sources Act

. The pioneer EEG (spanning 2001–2014) and its predecessor the Electricity Feed-in Act (1991) (spanning 1991–2001) class as feed-in tariff (FIT) schemes, a policy mechanism designed to accelerate the uptake of renewable energy technologies. The scheme offers long-term contracts to renewable energy producers, based on the cost of generation of the particular technology in question. In addition, a grid connection and preferential dispatch are also guaranteed. The tariffs (Einspeisevergütungen) themselves are funded by a levy or surcharge (EEG-Umlage) on electricity consumers, with electricity-intensive manufacturers being largely exempted. The EEG surcharge is based on the difference between the specified feed-in tariffs paid under the EEG and the sale of the renewable energy at the EEX energy exchange by the grid operators (also known as transmission system operators or TSO). , the TSOs comprise 50Hertz Transmission, Amprion, Tennet TSO, and TransnetBW. Amendments to the original EEG added the concept of a market premium in 2012. And the use of deployment corridors and auctions to set the levels of uptake and remuneration, respectively, in 2014. The EEG has generally been regarded as a success. The EEG (2000) led to the particularly rapid uptake of two renewable energy technologies: wind power and photovoltaics. The high growth of photovoltaics in Germany is set against its relatively poor solar resource. As the US NREL observed: The share of electricity from renewable energy sources has risen dramatically since the introduction of the EEG in 2000. The average annual growth rate is around 9billion kWh and almost all of this increase is due to electricity generation that qualifies for EEG payments. The EEG is also responsible for 88.3 Mt eq of avoided emissions in 2014, thus making a significant contribution to Germany's climate protection targets. The following table summarizes the remarkable uptake of renewables and in particular photovoltaics: Under the legislation, hydropower includes "wave, tidal, salinity gradient and marine current energy". The use of biomass for electricity generation has also grown as a result of the EEG. Biomass includes: "biogas, biomethane, landfill gas and sewage treatment gas and from the biologically degradable part of waste from households and industry". Mine gas is in a separate category. Germany's national energy policy is set out in the government's Energy Concept released on 28September 2010. On 6June 2011, following Fukushima, the government removed the use of nuclear power as a bridging technology and reintroduced a nuclear phase-out. Boosting renewable electricity generation is an essential part of national policy (see table). The EEG is also a key element in the implementation of EU Directive 2009/28/EC on the promotion of the use of energy from renewable sources. This directive requires Germany to produce 18% of its gross final energy consumption (including heat and transport) from renewable energy sources by 2020. In this endeavour, the EEG is complemented by the Renewable Energies Heat Act (Erneuerbare-Energien-Wärmegesetz or EEWärmeG). A chart overviewing German energy legislation in 2016 is available. == Legislation ==

The first discussions on feed-in tariffs in the German parliament began in the 1980s. The Association for the Promotion of Solar Power (SFV), Eurosolar, and the Federal Association of German Hydroelectric Power Plants (BDW) floated early concepts for a FIT scheme. The Economics Ministry and the CDU/CSU and FDP parties opposed non-market measures and argued for voluntary renewables quotas instead. In the late 1980s, CDU/CSU and Green politicians drafted a feed-in tariff bill and sought parliamentary and external support. The newly formed Environment Ministry backed the proposal. The incumbent electricity producers did not devote much effort to counter the bill because they believed its effects would be minimal and their lobby effort was preoccupied with the takeover of the East German electricity system following German reunification in 1989. The bill became the Electricity Feed-in Act (1991). no further adjustment to the feed-in tariffs occurred in 2011. This is explained because the installed capacity between 28 February 2011 and 1 June 2011 was less than 875 MWp (which multiplied by 4, is below the 3,500 MWp threshold). Renewable Energy Sources Act (2012) The act was again modified and came into force on 1January 2012. 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. The revised system includes a market premium scheme, the market premium was intended to prepare renewables for the market and to eventually lower their dependence on explicit policy measures. that fixed feed-in tariffs might be too expensive (when set too high) or stimulate too few installations (when set too low) rather than reacting to market conditions where costs quickly evolve. The proposed EEG (2016) is a continuation of the EEG (2014). It replaces prescribed feed-in tariffs with an auction system for the majority of renewable technologies. It repeats the deployment corridors specified in the EEG (2014) to control the uptake of renewable electricity over the next decade and to ensure that future renewable energy targets are honored. This corridor will be maintained by auctioning only a defined capacity each year. Only those renewables projects that bid successfully will receive EEG support for the electricity they supply over the following 20years. Each technology – photovoltaics, onshore wind, offshore wind, and biomass – will get an auction design tailored to its needs. Small renewables installations of under 750kW capacity or under 150kW for biomass will not be required to tender and will continue to receive conventional feed-in tariffs. Bidders from other European countries will be able to compete in the auctions for up to 5% of the annual capacity, under certain conditions. This landmark decision annuls an earlier Commission decision that the German renewable energy law of 2012 involved state aid. More specifically, the ECJ found that the Commission had failed to establish that the advantages provided by feedin tariffs involved state resources and therefore constituted state aid. == Feed-in tariffs ==

The structure and development of feed-in tariffs over the course of the EEG is a complex topic. This section is simply intended to give an indication. The feed-in tariffs for all technologies applicable are listed here. The following table summarizes onshore wind energy remunerations from April 2000 to October 2016. The table below summarizes photovoltaics remunerations from August 2004 to January 2012. , 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. Otherwise, for data beyond January 2012, please see: feed-in tariffs in Germany. == Politics ==

The development of the EEG has been the subject of political science analysis. A 2006 study finds that "the regulatory framework is formed in a 'battle over institutions' where the German parliament, informed and supported by an advocacy coalition of growing strength, backed support policies for renewables sourced electricity against often reluctant governments and the opposition from nuclear and coal interests". have influenced the EEG (2014) onwards. 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. == Effectiveness ==

Between 2015 and 2017, the fixed feed-in tariff scheme, introduced in 1991, is being phased out for around 80% of installations in favor of an auction system. This change is defined under the EEG (2014) and subsequent legislation. Feed-in tariff scheme (pre-2015–2017) 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. In 2008 the European Commission concluded that (although in 2014 it reversed its position to favor market-based instruments): When the avoided external costs are compared to the compensation that renewable energy operators were paid for electricity from renewable energy, a 2003 study finds that the reduced environmental impacts and related economic benefits far outweigh the additional costs required to compensate the producers of electricity from renewable sources. 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. 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. Denmark and Germany have been at the forefront of FIT scheme development. A 2008 economics study by RWI Essen was hugely critical of the high levels of feed-in support afforded photovoltaics. The study argues that the 2005 European Union Emission Trading Scheme (EU ETS) was sufficient to drive the transition towards a low-carbon economy, that the EEG does nothing intrinsic to reduce greenhouse gas emissions, and that the electricity produced represents one of the most expensive greenhouse gas abatement options on offer. Auction system (post-2015–2017) In June 2016 economist Claudia Kemfert from DIW Berlin contended that the new auction system, introduced with the EEG (2014) and being refined under the proposed EEG (2016), will not reduce costs, but will rather undermine planning security and increase the risk premium applied by investors. In addition, the auction system will lead to deployment corridors being missed as companies holding tenders delay construction for whatever reason. General The positive impact on the environment globally is less clear. Hans-Werner Sinn, a German economist and chair of the Ifo Institut für Wirtschaftsforschung argues that Germany's renewable energy support reduces world market prices for fossil energy. Thus, countries like China or the US have an incentive to produce more, and the net effect on the climate is zero. This effect is known as the green paradox. == Outlook ==

Grid reinforcement One challenge that lies ahead is integrating the electricity generated by decentralized renewable energy into the existing electricity grid structure. The grid was built to suit the centralized energy system of the then four main energy companies, namely, E.ON, EnBW, RWE, and Vattenfall. The need for grid reinforcement from north to south is commonly recognized. In response, the four TSOs proposed 92 expansion projects covering 7300km of lines, but not all will be required or approved. In 2015 the Federal Network Agency (Bundesnetzagentur) released its report on grid expansion plans covering the next decade. Rapid development of the grid is being driven by the uptake of renewables and the phase-out of nuclear power. But not all experts agree that a substantial build-out of the grid is necessary. Claudia Kemfert believes the large amount of coal-fired generation on the system is part of the problem. Kemfert said "our studies and models show that grid extension does no harm, but it's not strictly necessary decentralised, intelligent grids with demand management and, in the medium term, storage, would be much more important." 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. Deployment corridors The EEG (2014) specifies technology-specific deployment corridors (see table) which will be tracked by the new auction system. Environmental NGOs and renewable energy advocates argue that these corridors are insufficient to meet Germany's climate protection goals. 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". 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. 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. Moreover, this target will require the energy sector to be carbon free by 2040. Give the likely electrification of the transport and heating sectors, the deployment corridors laid out in the EEG (2014) are wholly inadequate. Onshore wind generation should instead grow by 6.3GW net per year (2.8GW is specified) and photovoltaics by 15GWp (2.5GWp is specified). Economic aspects A 2011 paper from DIW Berlin modeled the deployment of various renewable energy technologies until 2030 and quantified the associated economic effects. The uptake of renewable energy simultaneously creates business opportunities and imposes social costs for promotion. The study reveals that the continued expansion of renewable energy in Germany should benefit both economic growth and employment in the mid-term. The Berlin energy policy institute Agora Energiewende predicts that the EEG surcharge will peak around 2023 and then decline. The reasons being that expensive projects committed at the beginning of the EEG in 2000 will begin to expire after their 20years of support, that new projects are now much cheaper, and that the trend of reducing generation cost will continue. Energy sector transformation In November 2016, Agora Energiewende reported on the new and several other related new laws. It concludes that this new legislation will bring "fundamental changes" for large sections of the energy industry, but have limited impact on the economy and on consumers. == See also ==