New Energy Regulation In Germany Details 2019 Changes For PV Industry

- Dec 18, 2018 -

As expected, Germany’s second chamber of parliament has passed a new package of laws. They will enter into force on January 1, 2019. Among the the changes are the extraordinary FIT cuts for rooftop systems between 40 and 750 kW in size for February, March and April, and new tenders for wind and solar totaling 4 GW.

Germany’s federal council has accepted the new energy law package (Energiesammelgesetz) the parliament passed on for approval two weeks ago. With the legislative process finalized, the changes can enter into force as planned on January 1, 2019.

In an accompanying resolution, the council, comprising representatives of Germany’s federal states, urged the federal government to incorporate more regional expertise in future decisions regarding energy policy. It highlighted the importance of doing so at early stages of the legislative procedure, so that viable solutions for all regions can be jointly developed.

The new package contains a plethora of PV-related changes, the most important of which have been detailed below:

Extraordinary FIT cuts for PV rooftop systems between 40 and 750 kW

Contrary to the original proposal in the draft bill, the extraordinary FIT reductions will not be so big, and they will be effective from February to April, as opposed to starting in January. For these months, the regular FIT degression, as outlined under Germany’s renewable energy law (EEG), will be suspended.

Accordingly, tariffs for direct marketing for the first months of 2019, will be as follows (in Euros):

  • As of January 1, 2019: 10.36 cents per kWh

  • As of February 1, 2019: 9.87 cents per kWh

  • As of March 1, 2019: 9.39 cents per kWh

  • As of April 1, 2019: 8.90 cents per kWh

Since Germany’s fixed FIT is based on the determined tariffs for direct marketing, and are always 0.4 cents lower than direct marketing, the extraordinary cuts also apply to systems between 40 and 100 kW. PV systems rated above 100 kW are required to participate in direct marketing.

Extraordinary and innovation tenders between 2019 and 2021

With the new energy law package, the industry’s demands for new additional tenders for wind and solar have been heard. Consequently, between 2019 and 2021, 4 GW of additional capacity will be tendered. The volumes will continuously increase from year to year.

For 2019, there will be two tender rounds of 500 MW each for PV systems exceeding 750 kW – scheduled for March 1 and December 1. In 2020, the law foresees four additional tenders with a cumulative capacity of 1.4 GW; and in 2021, another four dates are scheduled with an aggregate capacity of 1.6 GW.

All capacity constructed under these tenders will not be added to Germany’s 52 GW cap of PV installations. Once this cap is reached, the federal government plans to discontinue subsidies for the solar industry. This cap will likely be achieved by 2020.

The new law also calls for “innovation tenders”, in which PV projects will also be eligible to participate. However, these will affect the technology-specific tenders that are held each year. For PV, the law sees a tender volume of 600 MW per year.  This year, around 50 MW were subtracted from the total tender volume.

As for the coming year, the innovation tender volume will also be deducted from the PV specific volume. In 2019, the law establishes three tenders with a cumulative capacity of 475 MW, in 2020 400 MW, and in 2021 it will be 350 MW. The first tender is scheduled for September 1, 2019, with a capacity of 250 MW.

New benchmark at 1,900 MW

Previously, the criteria for the determination of the monthly degression of the solar subsidies was a capacity of2,500 MW. This is the actual political goal for capacity additions per year. However, 2018 was the first time in five years where this was achieved. As such, with the Energiesammelgesetz, the benchmark has been lowered to 1,900 MW. This could see remuneration for PV systems up to 750 kW digress at a faster pace than has previously been the case.

Tenant-electricity surcharge

For the tenant electricity scheme, the new law stipulates that the deduction for PV systems exceeding 40 kW, which is analogous to the set tariffs for direct marketing, should be lowered to 8 euro cents, from 8.5 euro cents per kWh. As such, by April 2019, the tariff will decrease to 1.90 cents per kWh. For systems smaller than 40 kW, the tenant electricity deduction will continue at a level of 8.5 cents per kWh, from the set tariff for direct marketing.

The Bundesrat also passed a betterment for tenancy co-operatives, which seek to market their PV-sourced tenancy electricity: going forward, co-operatively organized landlord companies will be exempt from the obligation to pay corporate tax on their properties.

However, they could lose this exemption once they are generating incomes of more than 10% from sources other than rent from their tenants. Selling PV electricity from their rooftops is likely to exceed this, causing such co-operatives to stay away from installing tenancy PV systems.

The new regulation does make an exemption for income generated through the retail of PV electricity. The second chamber, however, did not yet pass this betterment, as it was canceled from the agenda on the day the new energy law was discussed. However, the bill will return to the floor of the Bundesrat for final approval in January.

Reduced renewable energy levy for self-consumption from cogeneration plants

Another part of the law package is the prolongation of the rule that cogeneration assets only have to pay part of the renewable energy levy. The interim arrangement expired already at the end of 2017.

Federal Minister of Economic Affairs Peter Altmaier (CDU) came to an agreement regarding this with EU representatives, this summer. Also, the EU commission has already approved that the rule does not collide with EU state aid regulations. Therefore, the now passed law will be applied retroactively to the beginning of this year.