How our electricity is to become climate-neutral by 2050

For 20 years, the Renewable Energy Sources (RES) Act has served as the key basis for expanding renewable energy in Germany. Having just undergone a major revision, it now points the way to the future of the energy transition.

woman in a small car with solar panels on roof© Adobe Stock/Mediaparts

On 23 September 2020, Federal Minister for Economic Affairs and Energy Peter Altmaier presented a 172-page bill to amend the Renewable Energy Sources Act (revision of the RES Act), with the ink barely dry. Experts were still working on it until the morning, before it went on to adopted by the Federal Cabinet. There was a lot to do, as the 2021 revision contains the biggest changes in content since 2014. The new act will replace the 2017 RES Act and is expected to come into force on 1 January 2021. Speaking at the presentation of the amendment, Minister Altmaier said: 'Today we are taking an important step towards boosting action to mitigate climate change and raise the share of renewable energy in Germany. By revising the RES Act, we have set the course for a modern, affordable and effective energy transition'.

According to the bill, Germany not only needs to focus on environmental protection and climate-change mitigation, but must also make efforts to keep costs down to provide a low-cost energy supply and keep electricity prices affordable. In order to ensure a cost-efficient and secure electricity supply, the RES Act also provides for renewable energy to be more closely integrated into the electricity market and the electricity supply system. Its expansion will be synchronised with the development of the electricity grid needed to transport it. This will also require efforts to raise acceptance for the changes involved in raising renewable energy use in Germany, especially onshore wind energy.

Background: Today, electricity from renewable energy already covers more than half of the total German electricity consumption on many days. This means that renewables make a significant contribution to achieving German and EU climate targets. These targets are becoming increasingly ambitious: the revised RES Act stipulates that all electricity generated and consumed in Germany is to be greenhouse gas neutral by 2050. The target for 2030 is to raise the share of renewable energy in gross electricity consumption to 65%. In order to achieve this, a series of changes are needed. This is why, in the first half of 2020, Germany adopted its phase-out of coal-fired power generation and also passed the Structural Reinforcement Act for Mining Regions, which is important for the post-coal era. And it also took steps to further expand combined heat and power generation. Furthermore, the German Government has already presented an amendment to the Offshore Wind Energy Act (German abbreviation: WindSeeG. In German only) intended to expand the capacity of this energy type. The key aim of the bill is to significantly increase the expansion target for offshore wind to 20 gigawatts by 2030. It also provides for an ambitious long-term expansion target of 40 gigawatts by 2040.

The amendment of the RES Act was also accompanied by a revision of the Federal Requirements Plan Act, which was also approved by the Federal Cabinet at the same time. This is because RES Act and the Federal Requirements Plan Act are mutually dependent: the latter contains provisions for expanding the electricity grid, which is to transport electricity generated from renewable sources over long distances, right through to the consumers.

So what are the key changes in the RES Act bill?

An ambitious expansion of renewables based on annual targets

The 2021 RES Act specifies annual auction quantities for onshore wind, photovoltaics and biomass. More information about the expansion corridors and auction quantities is available here. If the EU climate targets are raised, the expansion corridors and auction volumes will be adjusted accordingly up to 2030. The electricity demand on which the annual expansion targets are based will also be regularly reviewed in order to ensure that the goal of achieving 65% RE by 2030 remains in sight. These expansion targets will be adjusted if necessary.

Greater acceptance for renewables

In future, municipal authorities can become financially involved in the expansion of wind energy. The new RES Act also contains improved incentives for landlord-to-tenant electricity, as well as enhanced conditions for companies supplying their own power.

More innovations and greater cost efficiency

The funding costs for renewable energy are to be reduced based on several new measures, including an adjustment of maximum auction values, the hosting of auctions for large photovoltaic roof systems, and an increase in innovation auctions.

Ensuring the competitiveness of the industrial sector despite its intensive electricity costs

Thanks to adjustments to the 'special equalisation scheme', the industrial sector now has more planning security vis-à-vis the relief that will be granted under the RES Act.

Increasing shares of renewables will be integrated into the electricity system

The 2021 RES Act makes it more attractive to use modern plant technology. In addition, the use of smart meter gateways will make it easier to manage the plants. There will be a 'southern German quota' for auctions for onshore wind and biomass, which will improve coordination between the expansion of renewables and the expansion of the grid.

Sector coupling will be advanced

In future, ocean-going vessels will be able to supply themselves with low-cost shore power in ports, instead of using diesel generators. The RES Act bill also contains a commitment that a provision will be adopted later on in the legislative process to exempt green hydrogen from the RES Act levy. This provision will implement a key element set out in the National Hydrogen Strategy.

Efficient planning and approval procedures

The path is being prepared that will lead into a 'post-funding' era: during a transitional period, plants whose funding is ending can continue to market the electricity generated using this funding via the network operator. They receive will receive the market value of the electricity minus the marketing costs. The marketing costs are reduced if the plants are equipped with smart metering technology.

The next steps are for the 2021 RES Act and the Federal Requirements Plan Act to be debated in the Bundestag and Bundesrat as part of the parliamentary procedure. The aim is to conclude the legislative procedures before the end of this year.