German parliament approves controversial renewables reform

Germany’s federal parliament has approved a controversial revamp of the country’s energy transition. The government coalition of economy minister Sigmar Gabriel’s Social Democrats and Chancellor Angela Merkel’s Conservatives secured a majority vote for the fundamental reform of the Renewable Energy Act (EEG). The EEG is the main mechanism behind the Energiewende, Germany's sweeping transition to renewable energy.
The reforms will expose renewables to market forces by introducing competitive tenders, which the government says are necessary to lower costs and get a better grip on the expansion of green energy. But critics fear the changes will put Germany’s climate targets out of reach, and also shift the energy transition from a collective effort into the hands of big business.
Because of pressure from parliamentarians, the government coalition added some last-minute changes to the reform this week. Citizen energy projects must participate in renewables auctions from next year, but they will automatically receive the highest feed-in tariff accepted in the tender. Other changes include the option to shape more favourable conditions for so-called tenant power models. These allow apartment building owners to supply their tenants with power from rooftop solar PV facilities without paying the full renewables surcharge.
The parliament’s upper house, the Bundesrat, also approved the reformed law.

The new EEG which takes effect in 2017, received mixed reviews from stakeholders. The German Wind Energy Association (BWE) said the law would be a big challenge for the sector and criticised the limitation on wind power expansion in the so called “grid congestion zones”. The German Offshore Wind Energy Foundation warned that the new EEG was endangering value creation and jobs in the offshore sector by limiting expansion corridors. Energy efficiency association DENEFF called the new law a “bitter setback” for energy efficiency because energy-intensive industries would receive so many privileges that energy efficiency measures would not be an attractive option for them. Greenpeace Germany said that the country would need more power for electric mobility and heating in the future, so more renewables were needed – instead the new EEG was slowing down the energy transition by putting in place an “untested auction system” and “arbitrary harassment of wind power”. The Cologne Institute for Economic Research (IW Köln) said that the move to auctions for renewables was a step towards “a little more market focus” in the energy transition – but not enough. Costs could have been reduced even further by not giving each technology its own auction contingent, but by introducing technology neutral tenders.

See an energy ministry press release and further government information on the reform in German here.

For background on the reform, read the new CLEW dossier The reform of the Renewable Energy Act and the factsheet EEG reform 2016 – switching to auctions for renewables.

For more details, read the factsheet Defining features of the Renewable Energy Act (EEG) and the article Auctions to set the price for wind and solar - the debate).

Read a CLEW interview about Germany’s very first experiences with solar PV auctions.