The German Renewable Energy Sources Act 2023 (EEG 2023) has been passed - a new framework for renewable energy!
On 7 July 2022, the Bundestag passed the German Act on Immediate Measures for an Accelerated Development of Renewable Energy and Further Measures in the Electricity Sector (Gesetz zu Sofortmaßnahmen für einen beschleunigten Ausbau der erneuerbaren Energien und weiteren Maßnahmen im Stromsektor). The EEG "Easter Package" has thus been adopted. The EEG 2023 is on the way.
In the Bundestag session on 7 July 2022, the amendment to the German Renewable Energy Sources Act was passed. The following day, the Bundesrat also adopted the bill. The EEG 2023 has thus been passed. Individual amendments enter into force upon promulgation. This already took place on 28 July 2022. With the EEG 2023, the promotion of renewable energy enters a new phase. At the same time, the act signals the end of the promotion of renewable energy in its current form.
Abolition of the EEG surcharge marked the first step towards the EEG 2023
The name "Easter Package" makes it clear that the legislative process has been going on for some time. The first legislative step was the abolition of the EEG surcharge on 28 April 2022. This was followed by parliamentary consultations on the EEG amendment. The goals of massively advancing the development of renewable energy and establishing a new basis for financing were already anchored in the first bill and form the framework for the individual amendments to the act.
Legislative procedure brought significant changes
The previous amendments to the EEG showed that key changes were still being made to the act in the last few steps. This is the case with the EEG 2023 as well. It leaves the legislative process in a different version than when it entered the process. The recommendation from the Committee on Climate Action and Energy which was adopted by the Bundestag not only lists individual detailed amendments, it changes essential aspects of the legislative framework. It is worth taking a look at the details here.
Greenhouse gas neutrality by 2035, which was anchored in law, has been deleted
The EEG 2023 is designed to ensure that renewable energy accounts for at least 80 % of gross electricity consumption by 2030. This underlines the ambitious targets for development. Nevertheless, in the legislative process, the target of nearly climate-neutral energy production in 2035 was deleted. At second glance, however, it is clear that a new section 1a EEG 2023 links greenhouse gas neutrality to the completion of the coal phase-out. The programmatic guiding principle of section 1 EEG 2023 is thus linked to the coal phase-out.
The EEG 2023 marks the end of promoting renewable energy
The new section 1a EEG 2023 is even more significant in that a target date for the end of the promotion of renewable energy sources is now enshrined in the act. After the coal phase-out is completed, the further development of renewable energy sources will be market-driven. The promotion of renewables - as it has been practiced to date - will be phased out. Like the development targets, this is merely a guiding principle that does not grant enforceable rights to individual persons. The legislator has also indicated that the target will not apply to existing installations.
The authorisation to issue regulations regarding "Contracts for Difference" was deleted
The authorisation to issue regulations in the bill, which was intended to further develop the framework for such promotion, was deleted. The regulatory approach through "Contracts for Difference" was a conceivable option in this regard. It would have been possible to further develop the promotion design of subsidised auction-based direct selling in the face of a growing share of renewable energy and rising wholesale prices. This deletion can also be seen in the context of the new section 1a EEG 2023. Section 1a EEG contains a mandate directed at the Federal Government to submit a proposal by 31 March 2024 on funding the development of renewable energy after the coal phase-out is completed. However, by omitting the authorisation to issue regulations, a flexible option for action has been lost.
The new dimension of the meaning of the word "priority" of renewable energy sources now also applies to hydropower
The new dimension of the meaning of the word "priority" of renewable energy sources provides that development of renewables be included as a priority concern when weighing the interests in the approval procedure. This new regulation is welcome in terms of acceleration. It entered into force upon promulgation of the act. The bill still provided that this would not apply to hydropower plants. The legislator has moved away from this. Priority also applies to the planning and approval of hydropower plants when making decisions which require a weighing of interests. In addition to this central change, it was also decided in the legislative process that small hydropower plants will continue to receive financial support under the EEG 2023. The support scheme was changed back to the legal situation that applied previously.
Development of photovoltaics to be further accelerated
The detailed regulations for solar photovoltaic installations were also adapted in the legislative process and result in numerous changes. They show that one focus is on photovoltaics. It is still the case that it is only necessary to participate in the auction from an installed capacity up to and including 1 MW. In contrast, a limit of 6 MW now applies to all solar plants for renewable energy communities (Bürgerenergiegesellschaften). The restriction to ground-mounted systems was lifted. This is the threshold value; the auction procedure is only required if this value is exceeded. The distance corridors for installations along motorways or railways were also adjusted. The distance is no longer up to 200 metres, but now up to 500 metres. This increases the potential land that is available. It is still possible that further land can be developed through new classifications for photovoltaic systems such as "Agri-PV", "Moor PV", "Floating PV" or "Parking PV". In some cases, more financial support is granted for the individual systems. These areas offer new investment opportunities for investors.
A further distinction will be made for roof systems where the financial support is based on the values defined by law. A distinction is made between systems that fully feed the electricity generated into the grid and those that partially consume the electricity themselves. The financial support is higher for systems that fully feed in the electricity generated. Under certain conditions - including separate measuring devices - it is also possible to install a full and a partial feed-in system on the same roof at the same time. This makes own-consumption solutions more attractive. In addition, for smaller new solar installations with an installed capacity of no more than 25 kW, the blanket limitation of 70 % for the maximum active power feed-in no longer applies. For existing systems, however, the legislator wants to adhere to the current regulation.
Detailed regulations on wind energy are tightened and rising raw material prices are taken into account
Detailed regulations in the area of onshore wind energy were also adapted in the legislative process for the EEG 2023. The auction volume for onshore wind energy will be linked to the development of solar photovoltaic installations and the development of gross electricity consumption. It can be dynamically increased or decreased by 30 % depending on how it develops. The "southern quota" (Südquote) was omitted.
The legislator assumes that increasing the auction volume will ultimately also lead to new wind turbines being erected in the southern region. For this purpose, it was retained that a new corrective factor for a 50% location is introduced in the southern region. This makes it possible to increase the potential for development at less windy locations. In addition, the Federal Network Agency will now have the authority to increase the maximum value for onshore wind energy. Now it can be increased by up to 10 % in comparison to the current maximum value if prices for the raw materials used to construct wind turbines have increased by more than 15 %. This is largely aimed to address increases in steel prices. The issue of supply difficulties due to the current political situation and the consequences of the Covid pandemic was also addressed in the legislative process. Therefore, the realisation period has been extended by six months for onshore wind turbines.
"Hydrogen power plants" are promoted through the EEG
One new addition is that plants for the generation of electricity from green hydrogen can participate in the auctions. An auction volume of 800 MW is planned for 2023. This creates a new support segment for hydrogen, which, however, initially will only play a subordinate role. This is still more compared to the bill, as the bill only provided for regulations for hydrogen-based electricity storage.
The EEG surcharge is permanently abolished and the federal government now provides funding directly
In the bill, it was intended that the EEG surcharge could be reintroduced in the future in a new Energy Surcharge Act. This possibility was omitted in the legislative process. The EEG surcharge will now be permanently abolished after it is reduced to zero. In future, financial support for renewables will come entirely from the federal budget.
The new Energy Financing Act (EnFG) serves as the basis. It grants the transmission system operators a compensation claim against the federal government for payments made as financial support. The equalisation of burdens previously anchored in the EEG will be shifted to the EnFG. This law will form the basis for surcharges such as those under the Combined Heat and Power Act. It therefore also includes the exemptions from the obligation to pay a surcharge. They continue to have high economic relevance for energy-intensive companies.
Significant additions to provisions on grid connection
Changes to the provisions on grid connection were introduced in the current legislative process. They aim to simplify the grid connection procedure for smaller plant operators. The provisions came into force as the act was promulgated. Digitalisation and standardisation will speed up the connection process. The network operators have to provide a web portal that contains all information for the party seeking the connection. A request for a grid connection must be submitted on this portal. The network operator must respond to a request within one month and provide specific information such as a timetable or cost estimate. Due to the changes for grid operators associated with the new regulation, the legislator provides for a transition period until 1 January 2025. It remains to be seen whether this will contribute to the planned "unleashing" of the development dynamic.
The EEG 2023 - a new phase of promoting renewable energy begins!
This selection of changes shows that the framework for promoting renewable energy is again changing noticeably. The effect of minor details should not be underestimated. This opens up new perspectives and opportunities. However, it is also clear that renewable energy law will continue to move forward relentlessly. Further legislative changes are expected to ensure that the ambitious development targets are achieved.
