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Renewables are to account for up to 45 per cent of Germany’s electricity supply by 2025. For this target to be reached, wind and solar power will have to become more competitive in a market environment. This is why, in future, the level of funding for green electricity is no longer to be decreed by government, but determined via a market-based system. A few weeks ago, the Federal Ministry for Economic Affairs and Energy published a paper outlining how this could work in practice. The paper has met with a strong response, with the ministry receiving a total of 166 comments from the Länder, associations, and companies by 1 October.

Making electricity from renewables fit for the market

Just recently, the renewable energies set up a new record: they covered 32.5 per cent of Germany’s electricity demand in the first half of 2015. So the funding they receive no longer needs to help them enter the market: rather, it is about making sure that the electricity they generate can be predictable and low-cost - fit for the market. This is the aim of the Renewable Energy Sources Act, which was reformed last year.

From 2017, auctions are to become the norm for renewable energies like onshore and offshore wind energy, as well as photovoltaics - the technologies which contribute most to the expansion targets for electricity from renewables. Under the new system, someone wishing to operate a solar farm will calculate the amount of assistance needed, and then bid for it. The bidders demanding the lowest funding amount will be given the contract. More than 80 per cent of the electricity generated by newly installed renewables installations can receive funding as part of the auction scheme. Different auction schemes will apply to each technology: an auction for big offshore wind farms must of course be designed differently than an auction for PV systems on buildings.