More secure and more affordable: Federal Government makes energy transition fit for the future
The Federal Government has launched a comprehensive package of legislation, setting the course for continuing success in the energy transition.
The Federal Government adopted the draft Omnibus Energy Act on 5 November 2018. The legislation aims to implement key points in the coalition agreement – and particularly the targeted, efficient and market-oriented expansion of renewable energy. For this reason, in addition to the auctions for onshore wind and photovoltaics already scheduled, there will be special auctions to expedite the expansion. For example, in 2019 3.8 GW of onshore wind energy will be up for auction, rather than 2.8 GW, and 1.6 GW of photovoltaics rather than 0.6 GW. In total, the volume up for auction is increased by 4 GW for each of the technologies over a three-year period.
To be precise, a small amount has to be deducted from the volumes up for auction. This is due to another change introduced by the Omnibus Energy Act: the innovation auctions. The aim is to try out new pricing mechanisms and auction procedures – e.g. different ways of funding electricity generation from renewables, or measures which boost competition or which are particularly helpful for the grid and the system. These auctions are to be technology-neutral, and will begin in 2019 with a volume of 250 megawatts (MW).
An end to constant blinking at night
Another change envisaged in the Omnibus Energy Act is the "needs-oriented" night-lighting of wind turbines. The turbines are fitted with blinking red lights to warn aircraft. Since many residents feel bothered by the constant blinking throughout the night, the lights will only blink in future when an aircraft is actually in the vicinity. To this end, the turbines will be fitted with special equipment which searches the air space around wind farms for planes and helicopters. As soon as an aircraft comes near, the red lights start to blink. New installations will have to have appropriate night-lighting from 2020, and existing installations must be retrofitted by the end of 2021. Exceptions apply to smaller wind farms where the retrofitting would cost too much.
Reducing over-funding for PV and CHP
The Omnibus Energy Act also introduces a number of other changes. For example, the funding rate for larger PV installations (40-750 kW) is being reduced due to inadmissible over-funding: the costs of these installations have fallen more sharply in recent years than the funding rates – at the expense of all the consumers helping to fund the installations via the EEG surcharge. As a consequence, the funding rate for new PV installations is falling by between 6% (60 kW roof-top installation) and 18% (750 kW roof-top installation). It will continue to be possible to operate these installations economically. Smaller residential installations are not affected by the changes.
The over-funding of existing CHP (combined heat and power generation) installations will also be cut. Funding for installations between 50 and 300 MW will be reduced in line with the electrical output of the CHP installation, starting from an unchanged 1.5 ct/kWh for installations between 2 and 50 MW and going down to 0.3 ct/kWh for installations between 200 and 300 MW. There will be no funding at all from 1 January 2019 for installations with a capacity greater than 300 MW. This will save consumers about €130 million a year.
Reduced EEG surcharge for almost all CHP installation operators
The CHP installation operators will be paying a reduced EEG surcharge. Since 1 January 2018, the operators of approximately 10,000 CHP installations which have come on stream since 1 August 2014 have had to pay the full EEG surcharge for electricity they generate and consume themselves. The reason is that there had been over-funding here, and the EU had challenged this situation. Following constructive discussions with the European Commission, a new arrangement is being implemented: almost all operators of CHP installations will retain their existing exemption and will only have to pay 40% of the EEG surcharge in future – as had been the case until the end of 2017. They will be reimbursed with the extra EEG surcharge payments they made in 2018. This means that the new arrangement follows seamlessly from the old one. For highly economic large CHP installations, the surcharge will rise gradually in future in line with profitability in order to avoid over-funding. This also affects some 200 existing installations. Particularly profitable installations will in future not be exempted at all from the EEG surcharge.
Another change affects a special type of CHP installation: it will be possible to benefit from state funding again in future when modernising large CHP steam turbines. A change to the definition of “installation” in the 2016 reform of the CHP Act had made it virtually impossible to subsidise the modernisation of very large installations. The reason was that the cost of the modernisation must amount to at least 25% of the costs of the construction of a new CHP installation. The new arrangements reduce the threshold to 10% of the costs, thus facilitating the funding of the modernisations.
Metering or estimating – those who pass on electricity will have the choice
There also changes affecting the forwarding of electricity. These affect all final consumers paying a reduced EEG surcharge. In principle, volumes of electricity forwarded to a third party do not benefit from the reduced EEG surcharge rate paid by the forwarding party. So until now it has been necessary to measure the volume of forwarded electricity separately from the volume of electricity consumed by the party itself. The new rules will permit estimates to be made in certain circumstances and to a limited extent.
Renewables and conventional electricity working together to counter congestion
Another key change affects redispatch (you can find a precise explanation here): Where there is grid congestion, power stations ahead of the congestion are ramped down, and power stations on the other side of the congestion are ramped up. In future, not only conventional power stations but also renewable energy and CHP installations are to participate in redispatch if they can alleviate the congestion more effectively than conventional power stations. At present, redispatch costs about a billion euros a year, so by reducing the amount necessary, optimised redispatch can make a clear cut in the related costs.
Possibilities to produce hydrogen at sea
The Omnibus Energy Act also establishes a framework for offshore energy generation concepts which are not connected to the onshore grid. These include, for example, offshore wind farms which convert the electricity they generate into hydrogen. The hydrogen is then transported to shore by ship. The law has not previously allowed licences to be granted for the construction of such wind farms. There are no plans to provide funding for these installations.
The Act is to be adopted by the Bundestag on 30 November, to pass the Bundesrat on 14 December, and could enter into force by the end of 2018.