The revision of a German program to encourage the production of power from renewable energy sources has been authorized by the European Commission in accordance with EU State Aid regulations. The program reflects a recent revision to Germany’s Renewable Energy Act (also known as “EEG 2023”) and will help the country meet its energy and environmental goals as well as the EU’s strategic goals for the European Green Deal.
Germany informed the Commission of its proposals to extend and change its renewable energy assistance program, largely replacing the current support provided under the EEG 2021 program, which the Commission approved in April 2021 (SA.57779) and updated in December 2021 (SA.64376) and September 2022. (SA.102303). The modified program will be in effect through the end of 2026.
With a total budget of €28 billion, the EEG 2023 support program seeks to produce 80% of the power it consumes from renewable sources by 2030 and achieve carbon neutrality by 2045.
According to the plan, the assistance will often come in the form of a market premium that the network operator pays the producer in addition to the market price for the electricity. The aid will, however, come in the form of feed-in tariffs for relatively tiny installations. Through competitive, open, and nondiscriminatory bidding processes, beneficiaries will be chosen.
There will be separate tenders for each technology. The volume and quantity of innovative bids, as well as those for rooftop and ground-based solar photovoltaic, onshore wind, and biomethane, will both rise in Germany.
The amendments are:
To increase competition, further reduce the possibility of overcompensation, and keep costs down for customers and taxpayers, tender procedures are improved. In particular, the plan adds an efficient volume control mechanism for innovation, solar photovoltaic, and biomethane tenders on top of the existing safeguards for onshore wind and biomass. In order to prevent undersubscription, a mechanism exists that enables adjusting the volumes offered for each technology.
To deal with Germany’s grid congestion problems, a new temporary solution is presented. In order to address the higher costs of deploying renewable energy in the region and ensure that projects are developed where more electricity consumption occurs, regional measures will promote the development of electricity production from onshore wind, biomass, and biomethane in the South of Germany.
In order to avoid overcompensating producers, Germany will totally phase out its support for the production of renewable electricity during periods of negative pricing (i.e., when demand declines and prices rise) as of 1 January 2027.
The Commission evaluated the German program’s amendment in accordance with EU State Aid regulations, including the CEEAG 2022 Guidelines on State Aid for Climate, Environmental Protection, and Energy.
The European Commission’s findings:
In order to encourage the creation of renewable energy sources and lower greenhouse gas emissions, the plan is acceptable and required. Additionally, the plan improves grid stability.
The scheme’s good environmental advantages outweigh its negative implications in terms of competition distortions, making the aid appropriate since it is confined to the bare minimum required. In specifically, a premium based on the lowest bids in an open and transparent bidding process is used to provide the help. In order to guarantee that the tenders are competitive, the tenders also incorporate an adequate volume control mechanism for all technologies. Additionally, the assistance is capped at a sum determined by the funding gap, which is the sum required to construct initiatives. In the future, market signals will be less distorted because support during periods of low prices will be taken out.
Germany has created a comprehensive strategy for the independent economic evaluation of the EEG 2023 in accordance with the evaluation requirement envisioned by the CEEAG. Germany has also committed to improving data collection and the application of empirical methodology in this regard.
In accordance with EU State Aid regulations, the Commission accepted the change of the German plan on this basis.
Amendments to a German program (German Offshore Wind Energy Act – “WindSeeG”) to boost offshore wind energy generation in Germany have been authorized by the European Commission in accordance with EU State Aid regulations. The program supports the German Renewable Energy Act (Erneuerbare Energien Gesetz, or “EEG 2023”) and will help the EU achieve its strategic goals for the European Green Deal as well as Germany’s energy and environmental goals.
Germany informed the Commission of its intention to modify the current WindSeeG program in order to advance offshore wind energy production in Germany. The initial plan was approved by the Commission on July 23, 2014 (SA.38632), and it was repeatedly extended and changed until it was finally updated in 2021 (SA.57610), all in accordance with the 2014 Guidelines on State Aid for Climate, Environmental Protection, and Energy.
An increase in the expansion goals for offshore wind energy plants’ installed capacity from 20 GW to at least 30 GW by 2030, at least 40 GW by 2035, and at least 70 GW by 2040;
In the German Exclusive Economic Zone (‘EEZ’), there is a new tender process for a different kind of site that allows offshore wind electricity companies to bid for locations that have not been centrally pre-investigated by the German government. Germany hopes to accelerate and enhance offshore wind development with this new approach.
A dynamic bidding process that will enable Germany to distinguish and choose amongst numerous bids with a bid value of zero for tenders for non-centrally pre-investigated sites.
The Commission evaluated the modified plan in accordance with EU State Aid regulations, including the CEEAG Guidelines for State Aid for Climate, Environmental Protection, and Energy (effective January 2022).
In order to encourage the use of renewable energy sources and lower greenhouse gas emissions, the Commission determined that the measure is still necessary and appropriate.
The Commission also discovered that the assistance is reasonable and kept to a minimum. The Commission also concluded that the scheme’s benefits, particularly those related to the environment, outweigh any potential drawbacks in the form of competitive distortions. The aid is specifically given as a premium over the market price of power, based on the lowest offers in an open and transparent bidding process. The amount of assistance is capped at a level determined by the funding gap, which is the sum required to build initiatives.
Germany has created a comprehensive strategy for the independent economic evaluation of the program in accordance with the evaluation requirement envisioned by the CEEAG and has committed to improving data collection and the use of empirical approaches in this regard.
In accordance with EU State Aid regulations, the Commission approved the modified German program on this basis.
Based on two press releases by European Commission titled “State aid: Commission approves modification of German scheme to support electricity production from renewable energy sources” and “State aid: Commission approves amendments to German scheme to support offshore wind energy generation“ both of which were released on December 21, 2022