Minister Zypries: "Reform of grid fees reduces regional disparities"
By passing legislation on adjusting grid fees and promoting landlord-to-tenant electricity supply, the Federal government has implemented two important energy policy projects.
“If we want the energy transition to work, we need a rapid expansion of the grid. A fair distribution of the costs across the whole of society is crucial for this project to meet with public acceptance”, the Minister said, summing up the purpose of the Act on the Modernisation of the Grid Fee Structure (NEMoG) following its adoption by the Bundestag. Now that the new Act has also been given the green light by the Bundesrat, it will enter into force in the next few days. A few days ago, the Act on the Promotion of Landlord-to-Tenant Electricity Supply entered into force. This Act aims to ensure that tenants can better share in the benefits of the energy transition. In the following section, we will bring you up to speed on the most important changes set out in the two new laws.
Aligning transmission grid fees across Germany by 2023
Today, grid fees vary widely across Germany. In order to remedy this situation, they will be aligned in several stages. Grid fees are payments that utilities make to grid operators so they can use the grids (more information on this can be found in our ‘direkt account’ section). Transmission grid fees will be aligned across Germany by 2023. This will happen in several steps, the first of which will be taken in 2019 as provided for by the new Act. From 2023 onwards, everyone in Germany – irrespective of where they live – is to be charged at the same level. This adjustment process means that fees for using the northern and eastern parts of the grid will fall by more than 20 per cent compared with current levels.
Reform of ‘avoided grid fees’ will bring down costs
The Act also sets out new rules for ‘avoided grid fees’. The term ‘avoided grid fees’ is used to describe payments made to operators of decentralised electricity installations such as wind farms. These payments are financed using the grid fees that consumers pay as part of their electricity bill (more on this can be found in our ‘direkt insights’ section). Avoided grid fees are one of the reasons why the level of grid fees varies from one German region to another. In some regions, avoided grid fees account for up to 20 per cent of the total grid fees, while in others it is considerably less (with the national average being around 10 per cent). The partial elimination of the payments set out in the new Act benefits all consumers of electricity alike: households, businesses and industry.
For existing installations, the new rules mean that from 2018, payments will be frozen at the 2016 level. As grid fees are being reduced further, the Act distinguishes between volatile generation facilities – which are difficult to control (such as wind turbines and solar installations) – and those which are easy to control (such as combined heat and power stations). This means that from 2018, new volatile installations will no longer receive any ‘avoided grid fee’ payments. Existing volatile installations will see their payments reduced to zero in three stages up until 2020. Payments for controllable installations will be stopped in 2023, if they are connected to the grid after this date.
Providing tenants with electricity from solar rooftop installations
The second law that was recently adopted will ensure that tenants can better share in the benefits of the energy transition. Just like homeowners, they are to benefit from solar electricity generated on the rooftop of the building they live in. Landlords who offer their tenants electricity from new solar installations will be paid the ‘landlord-to-tenant supply premium’, which will make the system more profitable for them. The Act therefore provides a fresh boost for expanding solar power capacity. A study conducted on behalf of the Federal Ministry for Economic Affairs and Energy has found that up to 3.8 million households could benefit from landlord-to-tenant electricity supply.