Fifteenth anniversary of EEG: Ongoing success story
From 6.2 to 27.8 per cent in 14 years: The successful advance of renewable energies as an electricity supply source was made possible by the Renewable Energy Sources Act (EEG). The first EEG entered into force fifteen years ago on 1 April 2000.
With a ratio of 27.8 per cent of gross electricity consumption, renewable energies are the number one source of electricity in Germany: In as little as ten years, the expansion targets envisage them meeting 40 to 45 per cent, nearly half, of our electricity needs. In 2000, when the first version of the Renewable Energy Sources Act (EEG) entered into force, the contribution of hydropower, wind power, biomass, etc. to total electricity consumption amounted to just 6.2 per cent.
A lot has happened since: At over 55,000 gigawatt-hours (GWh) last year, on-shore and off-shore wind power has long superseded biomass as the foremost renewable power source. One reason for this is that since 2009 a growing number off-shore wind turbines have been feeding electricity into the grid. There has also been a rapid rise in photovoltaics capacity, advancing from 60 GWh solar power in 2000 to 34,930 GWh in 2014. This amounts approximately to the electricity consumption of ten million three-person private households and an annual electricity demand of 3,500 kilowatt hours.
Successful advance of renewables
The goal then set has therefore been achieved: When EEG 2000 entered into force, it aimed at paving the way for young technologies, such as wind power and solar energy, onto the market, through fixed feed-in-tariffs, purchase guarantees and priority access to the grid. Since then, the act has been repeatedly revised and adapted to the current situation. Most recently, the EEG was thoroughly reformed in the summer of 2014.
The then young technologies have long since come of age and progressed towards market maturity. Wind power and solar energy in particular have advanced beyond their niche role and established themselves as major pillars of electricity supply. From the outset then, the EEG was an excellent piece of legislation for promoting renewable energies, as the Federal Minister for Economic Affairs and Energy Sigmar Gabriel emphasised last year.
The success of the EEG has also found an international echo: In its ten-year report, the Renewable Energy Policy Network for the 21st Century (REN 21) found that feed-in tariffs and premiums as provided for in the EEG have proved to be an effective international tool for the market introduction of renewable energies and have so far functioned as the main drivers for the worldwide expansion of renewables.
These successful advances were, however, the very reason why this funding instrument had to be revised. In other words: The EEG had to be reformed not because it had failed but precisely because it was so successful. Due to the rapid expansion in renewables, the EEG surcharge that consumers pay with the electricity price continued to rise. By cutting feed-in tariffs, curtailing overfunding and abolishing bonuses, the EEG reform in 2014 has broken this cost spiral. This year, the EEG surcharge has not risen for the first time and has even declined slightly.
The EEG reform has also made it easier to steer renewables expansion. The motto, ‘the faster the better’ has been replaced by ‘the more plannable the better’. Via expansion corridors, the installation of new wind turbines, solar panels and biomass installations can now be reliably planned. The aim is to mesh the individual cogs of the energy transition efficiently with each other, because grid enlargement and electricity market reform must keep pace with the expansion of renewable energies. Renewables are also approaching market maturity. How much subsidy someone receives for his renewable electricity infeed will in future be decided through competitive tendering, where the key criterion will be who can make the most cost-effective offer. Depending on the technology, the most cost-effective projects will be awarded the tender. The pilot call to tender for solar parks (ground mounted photovoltaic installations) is already underway: As at 15 April, the national regulatory authority, the Federal Network Agency, has received the first bids for this. The funding mechanism for other technologies will adopt the tendering procedure by 2017 at the latest .
Retrospective: EEG milestones
- In 1990, the Renewable Electricity In-feed Act enters into force as the predecessor of EEG. For the first time, this gives priority access to the grid to electricity from renewable sources over electricity generated from fossil fuels. Utilities are obliged to use and pay for this electrical energy. The renewable energy ratio amounts to 3.4 per cent.
- In 2000, the first EEG sets the ground rules on future tariffs for renewable electricity in-feed. The subsidy is set at up to 50 cents per kilowatt over a funding period of 20 years. At the same time, the EEG defines the long-term goals of this instrument: sustainable energy supply, climate protection and upgrading technologies. Electricity from renewable energy sources makes up 6.2 per cent of the total.
- In 2004, the EEG is amended for the first time: Technologies that have developed less well now receive a higher tariff and with that more assistance. The renewable electricity ratio amounts to 9.3 per cent.
- In 2009, the EEG is revised to align funding more closely with market development. This is now making further progress: 16.3 per cent of the electricity mix stems from renewable energy sources in 2009.
- In 2010, the EEG is amended again. This time, overfunding in solar energy is reduced in response to rapid developments in the market and photovoltaics production, lowering investment costs for the technology. Renewable energy sources now account for 17 per cent of electricity consumption.
- In 2012, EEG 2012 enters into force. It primarily paves the way for improving the market integration of renewable energies. In another amendment in 2012, the decision is taken to curtail funding for solar PV. The renewable electricity ratio rises in 2012 to 23.7 per cent.
- 2014 sees the adoption of EEG 2014. It makes the expansion of renewable energies more cost-efficient and plannable and brings it closer into line with the market.