The Renewable Energy Sources Act (EEG) came into force on April 1, 2000.
The turn of the millennium also heralded a new energy era: the phasing out of nuclear power and the switch to electricity generation based on renewable energies.
In the meantime, renewable energies have grown out of their infancy and can stand on their own two feet.
To mark the 20th anniversary of the EEG, we spoke to our colleague and energy industry expert Hans-Günter Hogg about the importance of the law for our industry, but also about the necessary reforms.
And we dared to look ahead … the increased expansion of renewable energies could be used as a sustainable economic stimulus program after the coronavirus crisis.
Hans-Günter Hogg has been working in the energy sector in Germany and abroad for many years.
He knows both the large energy suppliers from the inside and, in recent years, the business models of young start-ups in particular.
Through his work in associations and committees, he is very familiar with the legal and regulatory framework.
Energy transition “Made in Germany” – the global success story of the EEG
Germany was a pioneer in the expansion of renewable energies with the EEG.
At the time, renewable energies were still very expensive and simply not economically viable.
This is precisely where the EEG came in.
The key points of the law: a guaranteed connection of the systems to the electricity grid, priority purchase of the electricity generated from renewable energy sources by the grid operators and a guaranteed feed-in tariff for 20 years.
This ensured investment security and brought about the desired expansion boom.
Due to the emerging mass market, the associated economies of scale and technological advances, costs have since fallen by 80 – 90 percent in some cases.
When the EEG was passed in the German Bundestag on February 25, 2000 by the then red-green majority, there was a great deal of concern and resistance in society and the economy.
However, contrary to all prophecies of doom, renewable energies (RE) developed at a rapid pace within the framework of this statutory funding.
While solar, wind, water and biomass contributed 5% to the German electricity mix at the time, their share today is around 50%, exceeding all expectations at the time.
The EEG became the driving force behind an unprecedented expansion of renewables, so to speak, and thus the actual basis for the energy transition that was only proclaimed much later, not only in Germany but also worldwide.
More than 100 countries have since followed this successful model and launched similar support programs.
With its subsidy structure, the EEG also gave rise to completely new industries and enabled innovative business models.
The young company beegy is one of them.
Its solutions are based on decentralized power generation, particularly with PV systems, combined with digital energy management.
System monitoring, intelligent control, battery packs and charging management for electromobility help to make optimum use of self-generated electricity.
Other models such as the networking of small systems are also feasible in the future.
Reform of the EEG necessary – the 5 most important adjustments
The EEG is not outdated after 20 years.
The framework can and must be used and further developed for the further expansion of renewable energies and the achievement of the new climate targets.
In many cases, renewables no longer need the often criticized financial support, but rather appropriate rules and conditions, also in order to achieve a steady reduction in the EEG levy.
I would just like to mention a few adjustments that I believe are absolutely necessary:
Prospects for the economic continued operation of decommissioned plants:
As early as 2021, several thousand systems will fall out of the EEG subsidy when the guaranteed 20 years expire.
There is even a risk that such old plants will be forced to shut down.
This is nonsensical and cannot be intentional, as most of these plants are still technically fully functional and could continue to generate environmentally friendly electricity for many years to come.
Legislators must swiftly enact a connection regulation (e.g. for self-consumption, marketing options, treatment of repowering, possibly feed-in tariffs with adjusted remuneration) in order to prevent the massive dismantling of renewable energy plants.
This is not about follow-up funding, but about providing a reliable framework to enable the continued cost-covering operation of old plants.
Immediate abolition of the PV cap:
The current PV cap of 52 GW could be reached by around mid-2020.
Photovoltaic systems would then no longer receive any funding under the EEG.
As a result, projects are already being halted today, as in many cases no or hardly any viable financing models can be agreed with lenders under these conditions.
The expansion of PV capacity threatens to come to a standstill, similar to what has already happened with wind expansion.
Large-scale job losses are imminent.
The government must urgently implement the opening already promised in the climate package in November 2019.
A review of the current expansion corridor rules would also be advisable.
Reliable rules for self-consumption solutions:
Self-consumption is playing an ever greater role in the private sector, but also increasingly in trade and industry, some of which have large rooftop systems of over 100 kWp.
This is because the cheaply produced PV electricity avoids expensive grid purchases.
This represents a considerable savings potential for system operators.
The fact that the EEG levy on self-consumed electricity up to 10,000 kWh/a is completely waived for small PV systems up to 10 kWp and reduced to 40 % for larger systems is clearly noticeable.
This is why there are always voices that want to stigmatize the current self-consumption regulation in the EEG as a privilege of high earners.
This is because they can afford to invest in PV systems with battery storage and in electric cars and thus benefit to the maximum from the elimination of the EEG surcharge and avoided grid charges including levies.
This conceals the fact that these systems initiated in this way naturally contribute significantly to a steady expansion of PV, despite falling EEG remuneration.
I therefore propose an adjustment to the current self-consumption system for new installations that excludes over-subsidization and at the same time takes into account installations that have been subsidized.
This is also urgently necessary with regard to the further expansion of photovoltaics and thus to support the climate targets.
Expansion of direct marketing and simplification of requirements for systems smaller than 100 kWp:
Direct marketing has now become established and proven itself as a means of bringing renewable electricity onto the market and reducing EEG costs for larger systems from 100 kWp.
System operators can choose the right offer for them from a large number of direct marketers.
Systems ‘100 kWp could also be transferred to direct marketing and thus further reduce the EEG surcharge volume if cost-effective metering concepts were approved and grid access procedures were simplified.
The necessary use of smart meters (iMSys) and meter reading balancing (ZSGB) is long overdue.
Corresponding regulations must also be made, particularly with regard to the above-mentioned point of the connection regulation for old systems, for which there must be a cost-compatible solution for marketing the electricity.
Many innovative providers are waiting in the wings with new business models and solutions, including beegy with its integrated IoT platform and automated virtual power plant.
In addition to the familiar direct marketing, other solutions such as PPAs, regional electricity models and plant pooling could also be implemented.
Modernization of the grid fee system and adjustment of the excessive tax burden:
The current grid fee regulations (NNE) and the problems of Section 14a EnWG (controllable loads) are also an obstacle to the flexibilization of the electricity markets and sector coupling.
Small PV systems with battery storage and charging facilities, possibly in conjunction with other controllable loads in the household, are ideal for making the electricity grids more flexible and reducing the load on them.
Many players in the renewable energy sector are already technically more advanced than the energy industry framework and could also effectively provide regional and grid-supporting flexibility with networked energy systems and consumers, as beegy, for example, has already demonstrated together with other partners as part of the Living Lab Walldorf research project.
However, this requires an urgent adjustment of the NNE in order to enable the market-based use of flexibility potential by appropriate providers on the one hand and to distribute the grid costs more fairly by including the feeders on the other.
This is long overdue and must be developed as a matter of urgency, if possible in conjunction with a consistent simplification of taxes and levies on electricity.
As is well known, taxes and levies account for more than 50% of the electricity price for a household in Germany in 2020 (including electricity tax, VAT, EEG levy, concession levy, KWKG levy).
In addition, electricity is subject to significantly higher taxes and levies than other energy sources, particularly fossil fuels, which represents a gross distortion of the market.
The corresponding proposals of the bne, for example, provide a good basis for discussing other solutions.
It is therefore not a question of abolishing the EEG, but of designing a modernized, future-oriented legal framework for the next stage of the energy transition.
The 2020s will be the decade of interlinking the sectors and system integration of RE in a digitalized energy landscape.
Seizing the opportunity – renewables as a solution to the economic and climate crisis
The climate protection successes in Germany are largely due to the conversion of electricity generation.
However, in order to achieve the targets for 2030, an increase in PV capacity of at least 10 GW per year would be required, also to avoid an electricity shortfall in the wake of the nuclear and coal phase-out.
However, politicians’ full attention is currently focused on containing the coronavirus pandemic and averting an economic recession.
Urgently needed decisions on energy policy could take a back seat.
However, many voices are currently being raised that see the current coronavirus crisis as an opportunity to combine the expansion of renewable energies with an economic stimulus program.
This could create many new jobs, give the economy a forward-looking boost and at the same time make sustainable progress on climate protection.
Germany could play a pioneering role here, as it once did in 2000, and set a global trend.