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Renewable Energy Sources Act (EEG)


The Renewable Energy Sources Act (EEG for short) regulates the priority feed-in of electricity from renewable sources into the power grid and guarantees producers a fixed feed-in tariff per kilowatt hour. This regulation was already created in 1991 with the Electricity Feed Act and was replaced in 2000 by the first EEG, which has been continuously adapted since then.
The EEG amendment 2023 extensively reformed the expansion targets as well as the financing.

What are the goals of the Renewable Energy Sources Act?

The overriding goal of the EEG is to accelerate the transformation to a sustainable and greenhouse gas-neutral power supply in the interest of climate and environmental protection. The expansion of renewable generation plants is promoted by a connection and purchase obligation, as well as a fixed feed-in tariff per kilowatt hour generated. Since the introduction of the EEG, the share of renewables in electricity consumption has increased from less than 10 % to approx. 45 %.

The target for 2030 is 80%. To achieve this, the expansion targets for PV, offshore wind and onshore wind have been increased. Thus, in the years 2027-2030, approx. 15 GW of wind turbine capacity and 20 GW of photovoltaic capacity are to be installed. In total, the installed capacity of wind and PV is to be tripled to over 350 GW by 2030.

How was and how will the expansion of renewables be financed in the future?

To promote the expansion of RE plants, they receive a feed-in tariff per kilowatt hour from the grid operator that is guaranteed for 20 years. The difference between the feed-in tariff and the revenue generated on the electricity exchange is reimbursed to the grid operators. To finance this compensation, the EEG levy per kilowatt hour of electricity consumption was imposed on end consumers until June 30, 2022.

In this way, every electricity consumer was supposed to help finance the energy turnaround according to their electricity consumption - at least almost everyone. This is because large consumers in particular, such as energy-intensive industry, were exempted from the levy, which meant that private households and commercial customers were disproportionately burdened. As the EEG levy rose from 2.05 ct (2010) to 6.76 ct (2020), criticism of this method of financing also grew. The reason for the tripling of the levy is partly the industrial privileges and the lower electricity price, which is the result of overcapacities of feed-in plants that are not oriented to the electricity price, such as nuclear and coal-fired power plants.

With the 2023 amendment to the EEG, the EEG levy was completely abolished and replaced by financing from the "Climate and Transformation Fund". A total of around €177.5 billion will be made available for the fund between 2023 and 2026, with €35.5 billion of this earmarked for EEG subsidies. The Climate and Transformation Fund will be funded primarily from emissions trading and subsidies from the federal budget.

Is large-scale battery storage supported by the EEG?

In addition to renewable generation plants, the innovation tender also promotes combinations of PV or wind plants with energy storage systems. These plant combinations receive a market premium in addition to the proceeds from direct marketing.

However, the combination with large-scale battery storage is only subsidized if the electricity is taken exclusively from renewable sources. This prohibits the purchase of electricity from the grid. The fields of application for large-scale battery storage within such innovation systems are thus significantly limited. It is not possible to provide negative control power for grid stabilization or market-oriented electricity trading to balance supply and demand.
These restrictions thus reduce the economic benefit of large-scale battery storage and increase the subsidy costs.
In the 04/2022 tenders, the tendered quantity of 400 MW was only just achieved, and in the previous 08/2021 tender, at 156 MW of 250, it was significantly underachieved.