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EEG-Novelle 2021 – more ambitious, but still a curate’s egg
Executive Education / 8 October, 2020
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Jan Andreas ist bekennender Fan erneuerbarer Energien und verfolgt den Markt intensiv seit 15 Jahren als Berater, Entwickler, Finanzierer und aktuell als Energie Ökonom der KfW Entwicklungsbank.

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On September 23, 2020, just three weeks after the draft law was published, the Federal German Cabinet adopted EEG-Novelle 2021 – the 2021 amendment to the German Renewable Energy Act. In principle, the legislation should be in place by the end of this year.

Germany’s main climate objective is set down in the new law: to ensure that all electricity in Germany is greenhouse-gas-neutral by 2050. But the amendment also sets an interim target for 2030: to cover 65 percent of the nation’s energy requirements using renewables, with specific development pathways planned for the individual technologies involved.

Legislators move rapidly, but development goals still inadequate

Thus onshore windfarm output is expected to grow from today’s 54 gigawatts to 71 gigawatts in 2030, while installed photovoltaic capacity should rise from 52 gigawatts to 100 gigawatts. This corresponds to an annual increase of 5 gigawatts for photovoltaics and 1.7 gigawatts for onshore wind power.

At first glance, the new law’s doubling of solar development goals appears ambitious. But the expected tendering levels for onshore wind power are clearly too low and would have to be significantly increased to successfully achieve the 65-percent milestone by 2030: the annual figure for new installations should be raised to at least 3.7 gigawatts.

Even the EEG target of 65-percent renewable energy by 2030 is not sufficiently ambitious. To reach the targets set in the Paris Climate Agreement, the country’s installed capacity needs to be multiplied many times over – especially in view of expectations that the EU-wide target for 2030 will soon be raised to 75 percent. This would mean at least doubling the anticipated tendering levels for solar energy.

No more cap – but solar has even more potential

The doubling of solar development targets has effectively abolished the cap on solar energy. Positive aspects: the capacity of freestanding solar-energy plants subject to tender has been increased from 10 megawatts to 20 megawatts, and the amount of land available for photovoltaic installations alongside motorways and railways has also been increased (the strip of land has been widened from 110 to 200 metres).

And yet solar energy’s potential is being restricted by a newly created requirement to put roof-mounted solar facilities with capacities exceeding 500 kilowatts out to tender. This means that less development will happen in this segment, because even if commercial contractors win a tender for a large roof-mounted plant, they will be unable to use the electricity themselves. Installers of systems put out to tender are prohibited from consuming the energy generated by these systems.

Positive signals for onshore wind power

On the other hand, the new law takes a decidedly positive stance on financial investment in wind power by municipalities, with the aim of increasing acceptance of windfarms among members of the general public. New installations in southern regions with fewer windy locations will continue to be eligible for financial stimuli in the form of subsidies. As part of this, the reference yield model is being adjusted and grid expansion areas abolished.

What happens after the Renewable Energy Act?

Where facilities are no longer eligible for funding, a newly revised transitional regime applies. In the draft bill, the transitional regime only applied to facilities with a capacity of up to 100 kilowatts. In the final version, the regime now also applies to larger facilities, although only until the end of 2021. This should mean that windfarms will also be able to benefit from this – albeit short – transition period.

The replacement of old wind turbines no longer eligible for funding is still not covered by the new legislation. Although there is now a short transitional period permitting continued operation until the end of 2021, it is still unclear whether new, more powerful wind turbines may be erected on these old sites.

Renewable energy sector still has enormous potential

Overall, the amended energy legislation is heading in the right direction. Politicians have now realised that combating climate change is becoming increasingly important – and above all, more significant for voters. This means that we can expect to see a certain amount of movement over the next few years, supported by specific EU Green Deal initiatives, but also by possible government reshuffles in Germany.

By taking the advanced Renewable Energy Finance certification course offered by Frankfurt School of Finance & Management, now in its 14th iteration, interested parties can deepen their knowledge of renewable energies and play an active role in the energy revolution.

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