Germany Moves to Tweak Renewables Law
The German Cabinet on April 8 approved a list of changes that are intended to put the brakes on spiraling retail energy prices that have Germans paying some of the highest electricity bills in the world.
The core of the changes outlined in the draft bill that must still go through the parliamentary process involves limits on renewable energy subsidies and, significantly, limits on the amounts of wind and solar capacity that can be connected to the grid each year. If approved possibly this July, the reform that caps solar and onshore wind at 2.5 GW per year, biomass at 100 MW per year, and reduces offshore wind targets from 10 GW to 6.5 GW by 2020 will become effective on Aug. 1.
The changes also revise long-term goals for renewable energy. Under the original law passed in 2000, Germany aimed to generate 80% of its power from renewables by 2050. The new targets are 40% to 45% by 2025 and 55% to 60% by 2035.
Germany already generates about 25% of its electricity from renewables, and enjoys some of the lowest wholesale electricity prices in Europe as a result, but the aggressive subsidies for wind and solar have been paid for by hefty surcharges on retail power bills.
Much of the controversy over Energiewende, the nation’s widely watched energy transition to renewables, has centered on surcharge exemptions granted to German industry, measures intended to protect domestic manufacturing and jobs but which have also shifted the largest share of funding the subsidies onto consumers. Currently about 2,100 companies enjoy exemptions. Those perks have come under fire from by European Commission (EC), which has been investigating whether they constituted an unfair advantage for German firms.
Though it was not included in the package passed on April 8, the EC and Chancellor Angela Merkel’s government agreed on changes that are intended to bring the system into compliance with European Union anticompetitive rules. The new regime will reduce, but not eliminate, the exemptions—about 400 firms are expected to lose them. The changes will reduce the total burden on consumers, though they will stay pay the majority of surcharges, about €8 billion compared to €7.4 billion for industrial users, according to Sigmar Gabriel, Germany’s minister of energy and economics.
The German cabinet is expected to approve the deal with the EC in May. The full package will be voted on by the German parliament this summer.
—Thomas W. Overton, JD is a POWER associate editor (@thomas_overton, @POWERmagazine)