Germany Backs Measure to Replace Renewable Incentives with Competitive Auctions

Lawmakers in Germany have voted to replace subsidies for wind and solar with competitively priced electricity prices.

The country’s upper (Bundesrat) and lower (Bundestag) legislative chambers on July 8 voted to adopt an amendment to the Renewable Energy Sources Act (EEG 2016) introduced by Minister of Economics and Energy Sigmar Gabriel. The legislation aims to replace feed-in tariffs with renewable energy auctions.

“[Renewable generators] are no longer small puppies,” Gabriel said as he introduced the bill earlier this year. “They have grown up and they need to face market pressure.”

The law is credited with enabling Germany’s energy transition, Energiewende, which calls for the country’s current share of renewable power to increase from 33% in 2015 to 40% in 2025, 55% in 2035, and 80% in 2050.

One of the earliest iterations of the law, EEG 2012 guaranteed feed-in tariffs for renewable power producers, setting fixed prices per kilowatt-hour, emphasizing priority access for renewables, and binding grid operators to buy all renewable power and sell it on the exchange. EEG 2014 continued a set level of payment per kilowatt-hour, but it obliged producers to sell electricity themselves at a market premium.

The new amendment comes at the behest of the European Commission, which in its state aid clearance for EEG 2014 requested a revised legal framework before 2017 that generalized competitive bidding models for renewable power.

EEG 2016, which the German federal cabinet cleared June 8, will replace fixed payment for renewable energy with tenders. While it still needs the European Union’s blessing, if signed by the federal president (as is expected) the law will partially go into effect by January 1, 2017.

—Sonal Patel, associate editor (@POWERmagazine, @sonalcpatel)