German Environmental Alert
9 April 2009
Authors:
Christian Hullmann
christian.hullmann@klgates.com
+49.(0)30.220.029.140
Mirko Zorn
mirko.zorn@klgates.com
+29.(0)30.220.029.116
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New Compensation Rates Guaranteed for
Green Energy Producers in Germany
Being "green" has never had a higher profile. Under the German Renewable Energy
Sources Act (Erneuerbare-Energien-Gesetz - EEG) producers of electricity from
renewable energy sources are entitled to compensation for electricity fed into the
grid. The grid system operator must accept all respective offers and pay a fixed price
guaranteed under the law. For almost every kind of green energy the guaranteed
price is higher than the market price. The advantage is obvious: Producers of green
energy and investors in this market segment can rely upon such prices and find a
sound base to calculate investments on.
Under the EEG the supply with electrical power in Germany shall change in a
sustainable way. The law aims at increasing the supply share of renewables from
currently 16% to at least 30% in 2020. Therefore, all technologies aiming at
generating electricity from renewable energy are being promoted. However,
capacity, location or materials used may give reason for excluding certain types of
power plants from promotion. In the end the law provides for the costs of promoting
electricity generated from renewable energy to be borne by the consumers.
An amended version of the EEG became effective on 1 January 2009. Under the new
law compensation for onshore wind energy increased from 7.87 Cents / kWh to 9.2
Cents / kWh and for offshore wind parks by more than 6 Cents to 15 Cents / kWh.
Electricity from biomass will also profit from higher compensation. Only operators
of large solar energy installations experience a reduction to 33 Cents / kWh.
Which technologies are subject to the EEG?
Generally, green energy includes natural energetic processes that can be harnessed
with little pollution. It is unanimous consent that wind power and solar radiation fall
under such a category. In contrast to them the classification of some other (nonbrown-energy) sources is highly controversial (in particular the classification of
nuclear power as green energy).
In order to avoid any misunderstandings the EEG defines explicitly the sources of
green energy being promoted:
•
wind,
•
biomass (incl. biogas),
•
solar radiation,
•
geothermal energy,
•
hydropower (incl. wave power, tidal power and salt gradient and flow energy),
•
landfill gas,
•
sewage treatment gas,
German Environmental Alert
•
mine gas and
•
biodegradable fraction of household waste and
industrial waste.
Some green energy technologies such as
hydropower, biomass, wind energy, and solar
radiation, are subject to additional requirements.
Hydropower is an eligible source of green energy
under the EEG only if (i) the electricity was granted
by run-of-river installations and not by storage
power installations (in particular no pump storage
plants), (ii) the erection of the installation did not
change the ecological status of the location for the
worse, and (iii) the installation was erected in
context of an existing barrage weir or dam and
without weir coverage.
As regards biomass there are special requirements
for certain kinds of installations (installations with a
capacity of more than 5 megawatts, installations
using special types of biomass and installations
using gas withdrawn from a gas network).
The regulations under the EEG do not apply to wind
energy installations providing for an insufficient
yield. There are no guaranteed prices for wind power
installations with a capacity of more than 50
kilowatts if the installation operator is unable to
provide evidence that they are able to yield at least
60% of the reference yield at the planned location.
With respect to solar radiation energy the law limits
the time of guaranteed prices for energy generated
by ground-mounted / freestanding systems or solar
systems mounted on buildings only constructed for
the purpose of power generation. The purpose of this
restriction is to keep important ecological areas free
from any buildings including solar parks. Due to this
the operators of such installations benefit from the
guaranteed prices under the EEG only if their
installations were erected prior to 1 January 2015
within an area subject to a zoning plan regulating
such installations.
Who is entitled to the guaranteed
fees?
The operator of a green energy installation is
entitled to fixed payments by the operator of the
nearest grid system. Entitlement to compensation
shall not be conditional upon the conclusion of a
contract. The operator of an installation is defined
as somebody who - irrespective of ownership - uses
the plant for the purpose of power generation from
renewable energy sources or mine gas.
The grid system operators under the EEG are
obliged to pay minimum fees fixed and guaranteed
by the law. Operators include transmission system
operators, i.e. operators responsible for high-voltage
and extra-high-voltage systems which are used for
the supra-regional transmission of electricity to
downstream systems.
What is the amount of the guaranteed
price?
The EEG provides for a guaranteed fixed
compensation in terms of minimum fees. The grid
system operator and the installation operator are
free to agree on higher fees but are not allowed to
stipulate fees below the guaranteed level.
The calculation of the amount of compensation
differs for each energy source. In addition to the
different structural factors st out above, the degree
of market penetration is also taken into account. The
more efficient the respective technology (e.g. wind
power) is, the more closely the fees will reflect the
market prices. Less cost-effective technologies (e.g.
solar power) are more expensive in order to promote
technological advancement. The compensation
scheme under the EEG is rather complex; it
differentiates not only between new installations
and modernised ones but also between several
levels of output while taking into account the
facilities overall capacities as well. The following
table gives an overview of the price structures under
the EEG:
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German Environmental Alert
Hydropower
New Power
Installations with a
Output
maximum capacity of
5 MW
Up to 500 kW of output
12.67 Cents / kWh
Output between 500 kW - 2 MW 8.65 Cents / kWh
Output between 500 kW - 5 MW
Output between 2 - 5 MW
7.65 Cents / kWh
Output between 500 kW - 10 MW
Output between 10 MW - 20 MW
Output between 20 MW - 50 MW
Output over 50 MW
Modernised Power
Installations with a
maximum capacity
of 5 MW
11.67 Cents / kWh
Power Installations
with a capacity over
5 MW
7.29 Cents / kWh
8.65 Cents / kWh
8.65 Cents / kWh
6.32 Cents / kWh
5,80 Cents / kWh
4.34 Cents / kWh
3.50 Cents / kWh
Landfill Gas, Sewage Gas and Mine Gas
Output
Up to 500 kW of output
Up to 1 MW of output
Output between 500 kW - 5
MW
Output between 1 MW - 5
MW
Output over 5 MW
Landfill Gas
Sewage Gas
Installations
Installations
9.00 Cents / kWh 7.11 Cents / kWh
Mine Gas
Installations
7.16 Cents / kWh
6.16 Cents / kWh 6.16 Cents / kWh
5.16 Cents / kWh
4.16 Cents / kWh
Solar radiation
Output
Up to 30 kW of output
Output between 30 kW 100 kW
Output between 100 kW 1 MW
Output over 1 MW
Installations attached to or
Freestanding Installations
on the top of buildings
43.01 Cent / kWh
31.94 Cent / kWh
40.91 Cent / kWh
31.94 Cent / kWh
39.58 Cent / kWh
31.94 Cent / kWh
33.00 Cent / kWh
31.94 Cent / kWh
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German Environmental Alert
Wind Energy
Onshore Installation
First 5 Years after
Installation
9.20 Cents / kWh
13.00 Cents / kWh (for
installations erected
prior 1 January 2016
compensation will be
15.00 Cents / KWh)
First 12 Years after
Installation
After 5 Years
Offshore Installations
5.02 Cents / kWh
After 12 Years
3.50 Cents / kWh
Biomass Energy
Output
Up to 150 kW of output
Output between 150 kW - 500 kW
Output between 500 kW - 5 MW
Output between 5 - 20 MW
Basic fees
11.67 Cents / kWh
9.18 Cents / kWh
8.25 Cents / kWh
7.79 Cents / kWh
Geothermal Energy
Output
Up to 10 MW of output
Output over 10 MW
Basic fees
16.00 Cents / kWh
10.50 Cents / kWh
How long can a green energy company
produce electricity for guaranteed prices?
The guaranteed compensation for green energy shall be paid for a period of 20 years commencing on the
first day of feeding electricity into the grid. Only compensation for electricity generated in hydroelectric
power installations with a capacity of over 5 megawatts are guaranteed for a term of 15 years only.
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©2009 K&L Gates LLP. All Rights Reserved.
April 9, 2009
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