German Renewable Energy Sources Act
The Renewable Energy Sources Act or EEG is a series of German laws that originally provided a feed-in tariff scheme to encourage the generation of renewable electricity. The specified the transition to an auction system for most technologies which has been finished with the current version EEG 2017.
The EEG first came into force on 1April 2000 and has been modified several times since. The original legislation guaranteed a grid connection, preferential dispatch, and a government-set feed-in tariff for 20years, dependent on the technology and size of project. The scheme was funded by a surcharge on electricity consumers, with electricity-intensive manufacturers and the railways later being required to contribute as little as 0.05¢/kWh. For 2017, the unabated EEG surcharge is. In a study in 2011, the average retail price of electricity in Germany, among the highest in the world, stood at around.
The EEG was preceded by the Electricity Feed-in Act which entered into force on 1January 1991. This law initiated the first green electricity feed-in tariff scheme in the world. The original EEG is credited with a rapid uptake of wind power and photovoltaics and is regarded nationally and internationally as an innovative and successful energy policy measure. The act also covers biomass, hydroelectricity, and geothermal energy.
A significant revision to the EEG came into effect on 1August 2014. The prescribed feed-in tariffs should be gone for most technologies in the near future. Specific deployment corridors now stipulate the extent to which renewable electricity is to be expanded in the future and the funding rates are no longer set by the government, but are determined by auction. Plant operators market their production directly and receive a market premium to make up the difference between their bid price and the average monthly spot market price for electricity. The EEG surcharge remains in place to cover this shortfall. This new system was rolled out in stages, starting with ground-mounted photovoltaics in the 2014 law. More legislative revisions for the other branches were introduced with the current EEG on 1January 2017.
The current EEG has been criticized for setting the deployment corridors too low to meet Germany's long-term climate protection goals, particularly given the likely electrification of the transport sector. The government target for the share of renewables in power generation is at least 80% by 2050.
The controversial EEG surcharge on consumer power bills was removed, effective 1July 2022. As a result, the average German household is expected to save around peryear. Payment obligations will now be met from proceeds from emissions trading and from the federal budget. Guaranteed tariffs for renewables project will continue to be offered going forward.
Background
The pioneer EEG and its predecessor the Electricity Feed-in Act class as feed-in tariff schemes, a policy mechanism designed to accelerate the uptake of renewable energy technologies. The scheme offers long-term contracts to renewable energy producers, based on the cost of generation of the particular technology in question. In addition, a grid connection and preferential dispatch are also guaranteed. The tariffs themselves are funded by a levy or surcharge on electricity consumers, with electricity-intensive manufacturers being largely exempted. The EEG surcharge is based on the difference between the specified feed-in tariffs paid under the EEG and the sale of the renewable energy at the EEX energy exchange by the grid operators., the TSOs comprise 50Hertz Transmission, Amprion, Tennet TSO, and TransnetBW.Amendments to the original EEG added the concept of a market premium in 2012. And the use of deployment corridors and auctions to set the levels of uptake and remuneration, respectively, in 2014.
The EEG has generally been regarded as a success. The EEG led to the particularly rapid uptake of two renewable energy technologies: wind power and photovoltaics. The high growth of photovoltaics in Germany is set against its relatively poor solar resource. As the US NREL observed:
The share of electricity from renewable energy sources has risen dramatically since the introduction of the EEG in 2000. The average annual growth rate is around 9billion kWh and almost all of this increase is due to electricity generation that qualifies for EEG payments. The EEG is also responsible for 88.3 Mt eq of avoided emissions in 2014, thus making a significant contribution to Germany's climate protection targets. The following [|table] summarizes the remarkable uptake of renewables and in particular photovoltaics:
| Year | Hydropower | Onshore wind | Offshore wind | Biomass | Photovoltaics | Geothermal | Total gross electricity generation | Share of gross electricity consumption |
| 1990 | 17,426 | 71 | — | 1,435 | 1 | — | 18,933 | 3.4 |
| 1995 | 21,780 | 1,500 | — | 2,010 | 7 | — | 25,297 | 4.7 |
| 2000 | 21,732 | 9,513 | — | 4,731 | 60 | — | 36,036 | 6.2 |
| 2005 | 19,638 | 27,229 | — | 14,354 | 1,282 | 0.2 | 62,503 | 10.2 |
| 2010 | 20,953 | 37,619 | 174 | 34,307 | 11,729 | 28 | 104,810 | 17.0 |
| 2014 | 19,590 | 55,908 | 1,449 | 49,219 | 35,115 | 98 | 161,379 | 27.4 |
Under the legislation, hydropower includes "wave, tidal, salinity gradient and marine current energy". The use of biomass for electricity generation has also grown as a result of the EEG. Biomass includes: "biogas, biomethane, landfill gas and sewage treatment gas and from the biologically degradable part of waste from households and industry". Mine gas is in a separate category.
Germany's national energy policy is set out in the government's Energy Concept released on 28September 2010. On 6June 2011, following Fukushima, the government removed the use of nuclear power as a bridging technology and reintroduced a nuclear phase-out. Boosting renewable electricity generation is an essential part of national policy.
The EEG is also a key element in the implementation of EU Directive 2009/28/EC on the promotion of the use of energy from renewable sources. This directive requires Germany to produce 18% of its gross final energy consumption from renewable energy sources by 2020. In this endeavour, the EEG is complemented by the Renewable Energies Heat Act. A chart overviewing German energy legislation in 2016 is available.
Legislation
The first discussions on feed-in tariffs in the German parliament began in the 1980s. The Association for the Promotion of Solar Power, Eurosolar, and the Federal Association of German Hydroelectric Power Plants floated early concepts for a FIT scheme. The Economics Ministry and the CDU/CSU and FDP parties opposed non-market measures and argued for voluntary renewables quotas instead. In the late 1980s, CDU/CSU and Green politicians drafted a feed-in tariff bill and sought parliamentary and external support. The newly formed Environment Ministry backed the proposal. The incumbent electricity producers did not devote much effort to counter the bill because they believed its effects would be minimal and their lobby effort was preoccupied with the takeover of the East German electricity system following German reunification in 1989. The bill became the Electricity Feed-in Act.Prior to the Electricity Feed-in Act, operators of small power plants could only obtain access to the grid at the behest of the grid owners and were sometimes refused entirely. Remuneration was based on the averted costs faced by the energy utilities, yielding low rates and unattractive investment conditions. Government support for renewable electricity before the act was primarily through R&D programs administered by the Federal Ministry for Research and Technology.
Electricity Feed-in Act (1991)
Germany first began promoting renewable electricity using feed-in tariffs with the Electricity Feed-in Act. The long title is the law on feeding electricity from renewable energy sources into the public grid. The law entered into force on 1January 1991. This legislation was the first green electricity feed-in tariff scheme in the world. The law obliged grid companies to connect all renewable power plants, to grant them priority dispatch, and pay them a guaranteed feed-in tariff over 20years.While the Electricity Feed-in Act did much to promote wind power, the installed capacity of photovoltaic installations remained low. The remuneration for photovoltaics was simply too little in most settings. Low-interest loans were then offered under additional government programs.
Beginning in 1998, the Electricity Feed-in Act was challenged under European Union anti-subsidy rules by PreussenElektra. The European Court of Justice found that the arrangements did not constitute state aid. The court concluded:
The Electricity Feed-in Act suffered from structural flaws. First, the coupling of feed-in tariffs to the electricity price proved too volatile to ensure investment security. Second, the distribution of burdens was uneven, with grid operators in high-wind regions having to pay out more. In light of this latter concern, the act was amended in 1998 to introduce, among other things, a double 5% cap on feed-in purchases. This ceiling slowed uptake in some regions.
The Electricity Feed-in Act was enacted by a CDU/CSU/FDP coalition government.