Germany to reform renewables subsidies with auction-based system

Berlin – The German Bundestag has voted to reform the Renewable Energy Law (Erneuerbare Energien Gesetz, EEG), which is responsible for determining subsidies to producers of renewable energies through feed-in tariffs. Under the reformed law, 80% of renewable installations will be required to bid for government subsidies, instead of receiving them automatically.

Starting in 2017, new installations will not be automatically eligible for feed-in tariffs, and will instead need to bid for support through an auction-based system. Installations that need the least financial support to be viable will be approved.

The EEG, established in 2000, has overseen a huge growth in renewable energy generation in Germany, which is now responsible for a third of electricity output. Feed-in tariffs were set for a period of 20 years, and were funded by households and businesses through electricity surcharges. However, after 16 years of operation and a growing renewables sector, the scheme was deemed to be in need of reform in order to reduce costs.

Small installations (<750kW capacity for solar, <150kW for biomass), as well as installations owned by private citizens will continue to be funded under the old EEG scheme, but the Government believes that 80% of new renewable installations will be subject to the new scheme.

For more information about Germany’s energy reforms, see the BWMI Publication, ‘Making a success of the energy transition‘.

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