German Energy Reform Approved

Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--A major overhaul of Germany's renewable energy support system has been passed by Parliament in an effort to cut the cost of subsidizing renewable and put a halt to the country's spiraling electricity prices.

The reforms to the Renewable Energies Act (EEG) by the coalition government, led by Chancellor Angela Merkel, will mean cuts to the generous renewable energy subsidies that have spurred rapid green energy growth over the past decade. Around a quarter of the country's power now comes from renewables, with the government aiming to increase that to 40-45% of the total by 2025, rising to 60% by 2035.

In February, it was revealed that Germany is paying up to 50% more than other European Union (EU) countries for domestic electricity, thanks largely to the drive to the switch to renewable energy. For additional information, see February 13, 2014, article - Germany Paying 50% More for Electricity.

The reforms are not as harsh as some feared but will see limits of 2,500-megawatt (MW) capacity per year applied to onshore wind and solar photovoltaic (PV). The country's budding offshore wind sector will also be hit with a cap of 6,500 MW until 2020. Economy Minister Sigmar Gabriel had also called for cuts in subsidies from the current €0.17 ($0.23) per kilowatt hour (KWh) to €0.12 per KWh by 2015.

The reforms have been greeted with a mix of scepticism and anger by the renewables sector.

The Solar Industry Association (BSW-Solar) has reacted angrily to a change that will see a surcharge imposed on solar PV systems that supply electricity directly to their owners.

"Large parts of the industry will continue to be exempt from financing the Energy Transition, while those who protect the environment with solar power are asked to pay," said BSW-Solar Chief Executive Officer Carsten Körnig. "With the constitutional challenge, we want to establish the cause of justice in the financing of the Energy Transition again. Solar generation makes an important contribution to the implementation of a decentralized Energy Transition based on broad citizen participation. Those who impede this sector with absurd charges endanger the entire Energy Transition. We must not allow climate protection and citizen engagement to be punished."

German Wind Energy Association President Sylvia Pilarsky-Grosch said "Despite a large majority in the Bundestag and the Bundesrat, the German government apparently lacks the courage to give the Energiewende new momentum. Now that renewables have grown to cover 25% of domestic power demand within just a few years, we are entering a new phase of the energy transition. The governing coalition also plans to have renewables cover 40-45% of gross German power consumption by 2025 and 55-60% by 2035. But the current proposed amendments for the Renewable Energy Act (EEG) do not address what the Energiewende needs and does not provide answers to crucial questions. The sum of the structural adjustments constitutes a massive setback for affordable onshore wind power. We therefore consider these amendments misdirected."

One of the most contentious changes are cuts to the energy price discounts received by Germany's most energy-intensive industries, such as chemical processing and steel, and those businesses with their own power plants. Many have been exempt from paying the renewable subsidy or have paid significantly less than other businesses for electricity. Germany's preferential subsidies for heavy industry have been facing an investigation by the European Commission (E.C.). Last week, however, Merkel's government and the E.C. reached a compromise, which will allow most of Germany's heavy industry avoid the green energy surcharges. The number of energy-intensive industries companies that will get discounts on green energy surcharges will be reduced from the current total of 2,100 to 1,600.

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