The next step towards expanding renewable energy

The 2021 Renewable Energy Sources Act creates the legal framework necessary for Germany to be able to achieve its climate and energy targets for 2030 and 2050 in the electricity sector.

Two hands holding the sun© Adobe Stock/chartphoto

At present, electricity from renewable sources already accounts for more than half of Germany's total electricity consumption many days of the year. The further expansion of electricity generation from renewables is a central pillar of the energy transition. The aim is to make our energy supply more climate-friendly while decreasing our dependency on imports of fossil fuels. An important step on this path is the law amending the Renewable Energy Sources Act (EEG) and other energy regulations. The 2021 Renewable Energy Sources Act came into force on 1 January 2021. It creates the legal basis for continuing the expansion of renewable energy in the long term.

In the future, Germany will use the updated EEG to make a significant contribution to achieving its national and European climate targets. The amendment completes the comprehensive legislative package that the Federal Government has already initiated in the current legislative period (coal phase-out, grid expansion).

Targeting 65% renewables by 2030 and greenhouse gas neutrality before 2050

Following on from the adoption of the 2030 Climate Action Programme (in German only), the Renewable Energy Sources Act 2021 now creates the legal framework based upon which Germany intends to achieve its target of a share of 65% renewable energy in gross electricity consumption by 2030. Furthermore, the law seeks to help ensure that both electricity supply and electricity consumption become carbon-neutral before 2050. To this end, the law specifies the pace at which sustainable energy such as wind and photovoltaics are to be expanded over the next few years.

Some of the expansion corridors for the period up to 2030 laid down in the Renewable Energy Sources Act are even more ambitious than those defined in the Climate Action Programme. This is to ensure that the expansion target of 65% will definitely be achieved. In future, it will be reviewed every year whether the individual expansion corridors are being followed at the appropriate pace. For the first time, the 2021 Renewable Energy Sources Act provides for annual monitoring, which can be used to make adjustments if necessary.

Improved conditions to support renewables such as onshore wind and solar energy

In order to achieve the new expansion targets, the 2021 Renewable Energy Sources Act has improved the framework conditions for the individual technologies for renewable energy sources. As regards the expansion of onshore wind energy, for example, it will in future be possible to use wind power for electricity generation including at locations that do not have a lot of wind. In addition, special solar plants installed on agricultural land, bodies of water and car parks will also be allowed to participate in the innovation auctions that are geared towards innovative combinations of renewable power installations. The quantities allowed to be auctioned have also been increased.

More public acceptance on the ground

The 2021 Renewable Energy Sources Act is good news for municipalities, for instance, where wind turbines generate green electricity for the energy transition. Seeking to further increase public acceptance for the expansion of onshore wind energy, municipalities will now be able to acquire a financial interest in local wind turbines.

Tenants are increasingly also opting for climate-friendly and affordable solar power supplied by the photovoltaic system installed on their apartment building or nearby buildings. Several changes in the new Renewable Energy Sources Act make the use of this so-called 'landlord-to-tenant' electricity less bureaucratic and more attractive.

The financial incentives provided for renewable self-supply are also very important for raising public acceptance for the projects that have been undertaken. The 2021 Renewable Energy Sources Act therefore provides for exempting such cases from the EEG surcharge to a greater extent than before.

Entering the 'post-funding era'

Another purpose of the 2021 Renewable Energy Sources Act is to adjust the legal framework for renewable energy installations whose 20-year period of funding support expires from 2021.

Onshore wind turbines that no longer receive funding support may participate in auctions in 2021 and 2022 to enable them to remain economically viable despite lower electricity prices. This applies to operators of turbines unable to acquire planning permission for repowering. The Federal Government plans to enact a corresponding ordinance shortly.

Moreover, the 2021 Renewable Energy Sources Act provides a transitional solution for operators of small installations up to 100 kilowatts (except wind turbines), for whom it may currently be uneconomical to continue operating services by selling these directly. The operators of such installations are given the option to carry on making the electricity generated in their plants available to the grid operator until the end of 2027 for which they will receive the market value of the electricity delivered minus the marketing costs for it.

Reducing costs for promoting renewable energy sources and the EEG surcharge

As we seek to increase public acceptance for the expansion of renewable energy, it is also important to curb the costs of promoting renewable energy sources and to put an increased focus on competitive aspects.

To this end, the 2021 Renewable Energy Sources Act is introducing various individual measures, such as adjusting the maximum values in the auctions for onshore wind and photovoltaics and including further technologies in the auctions, such as large and medium-sized rooftop photovoltaic systems. In addition, competition in the auctions for ground-mounted solar installations will be strengthened by allowing more areas than before to participate in the auctions.

The amendment of the Renewable Energy Sources Act supplements the decision taken last year to lower the EEG surcharge by making available additional funds from the federal budget. The reduction of the EEG surcharge was initiated in parallel to the amendment of the Renewable Energy Sources Act

Implementation of the National Hydrogen Strategy

The National Hydrogen Strategy announced in the 2030 Climate Action Programme, which was adopted by the Federal Cabinet on 10 June 2020, foresees a limited EEG surcharge for the production of green hydrogen. This will facilitate the market ramp-up of hydrogen production in Germany and ensure that the coupling between the energy supply sectors in Germany can progress further.

In future, hydrogen producers will be able to choose between two options. Firstly, there will be the possibility to limit the EEG surcharge for manufacturers of hydrogen within the framework of the special equalisation scheme (in German only). Secondly, the Federal Government will create the possibility for green hydrogen producers to be fully exempted from the EEG surcharge on the basis of the Act.

For the year 2021, the EEG amendment stipulates various mandates for the Federal Government to enact ordinances that further define the details of the implementation of the statutory regulations.

In parallel to the amendment of the Renewable Energy Sources Act, Germany has also campaigned intensively for climate-change mitigation at European level in recent years and expressly supported the initiatives of the European Commission. This shows that the Federal Ministry for Economic Affairs and Energy is actively supporting the Federal Government in the debate on further increasing the European climate targets and on the contribution to be made by the Member States.