Memorandum by Christiane Golling and Marco
Nicolosi, Institute of Energy Economics (EWI), Cologne
GENERAL OVERVIEW
The German Renewable Energy Act (EEG), which
has become effective in 2000, should advance the development of
renewable energy plants in Germany. By 2010 at least 12.5 % electricity
should be generated by renewable energy sources (RES). Since this
objective has already been reached (RES-E reached a share of 14.2
% in 2007—see table 1) it will be increased further to at
least 30% electricity from RES (RES-E) in 2020 within the upcoming
amendment in 2009. Table 1 and 2 are going to provide an overview
of the RE deployment, generation and total costs.
Table 1
TOTAL EEG GENERATION
|
| Year | Hydropower
| Windpower | Biomass
| Biowaste | Photo-
voltaics
| Geothermal
Power
| Sum Power
Generation
| Share of
demand
| Average
Remuneration
| Total
Remunderation
|
| GWh
| GWh | GWh
| GWh | GWh
| GWh | GWh
| % | ct/kWh
| Mrd. EUR |
|
| 2000 | 24.936
| 7.550 | 2.279
| 1.850 | 64
| 0 | 36.679
| 6,3 | 8,50
| 0,88 |
| 2001 | 23.383
| 10.509 | 3.206
| 1.859 | 116
| 0 | 39.073
| 6,7 | 8,69
| 1,58 |
| 2002 | 23.824
| 15.786 | 4.017
| 1.945 | 188
| 0 | 45.760
| 7,8 | 8,91
| 2,23 |
| 2003 | 20.350
| 18.859 | 6.970
| 2.162 | 313
| 0 | 48.654
| 8,1 | 9,16
| 2,61 |
| 2004 | 21.000
| 25.509 | 8.347
| 2.116 | 557
| 0,2 | 57.529
| 9,5 | 9,29
| 3,61 |
| 2005 | 21.524
| 27.229 | 10.495
| 3.039 | 1.282
| 0,2 | 63.569
| 10,4 | 10,00
| 4,50 |
| 2006 | 20.000
| 30.710 | 15.500
| 3.639 | 2.220
| 0,4 | 72.069
| 11,7 | 10,88
| 5,81 |
| 2007 | 20.700
| 39.500 | 19.500
| 4.250 | 3.500
| 0,4 | 87.450
| 14,2 | 11,40
| 7,90 |
|
| Source: BMU (2008). |
Table 2
TOTAL EEG CAPACITIES
|
| Year | Hydropower
| Windpower | Biomass
| Photo-
voltaics
| Geothermal
Power
| Total
Capacity
|
| MW
| MW | MW
| MW | MW
| MW |
|
| 2000 | 4.572
| 6.112 | 664
| 100 | |
11.448 |
| 2001 | 4.600
| 8.754 | 790
| 178 | |
14.322 |
| 2002 | 4.620
| 11.965 | 952
| 258 | |
17.795 |
| 2003 | 4.640
| 14.609 | 1.137
| 408 | |
20.794 |
| 2004 | 4.660
| 16.629 | 1.550
| 1.018 | 0,2
| 23.857 |
| 2005 | 4.680
| 18.428 | 2.192
| 1.881 | 0,2
| 27.181 |
| 2006 | 4.700
| 20.622 | 2.740
| 2.711 | 0,2
| 30.773 |
| 2007 | 4.720
| 22.247 | 3.238
| 3.811 | 2,4
| 34.018 |
|
| Source: BMU (2008). |
Core elements of the EEG are the obligation of the grid operators
to connect the RE plants to the grid and to buy the RES-E at a
pre-specified tariff.[81]
The EEG is a technology specific feed-in tariff system (FIT).
Every technology has different tariffs, according to size and/or
fuel or site quality. For Biomass, different bonuses are granted
for sustainability of the fuel, combined heat and power (chp)
and new technologies. For Wind, different tariffs are granted
for locations with different wind speeds. Due to the complexity
of the law, this "piece of evidence" is going to focus
on the regulation for wind power.
ONSHORE WIND
POWER
The tariff structure for wind power is quite complex. The
tariffs are differentiated by basic tariff and starting tariff.
The EEG 2004 and the current amendment (which will become effective
in 2009) have basically the same methodology. Altogether, the
guaranteed remuneration is granted for 20 years. The starting
tariff is valid for five years, if the site reaches 150% of the
reference yield. The reference site has a wind speed of 5.5 m/s
30 meters above ground. For every 0.75% below this reference yield,
the starting tariff is extended by two months. Very good sites
receive the high starting tariff for five years and low quality
sites, which receive only 60% of the reference yield, obtain the
starting tariff for 20 years. Plants with a yield below 60% of
the reference value are not eligible for remuneration. The motivation
behind this methodology is to increase the attractiveness for
lower yield wind sites. Thereby, the policy makers try to reduce
the margins for optimal wind sites at the shore and at the same
time encourage deployment within the whole country. Table 3 provides
an overview of the annual wind power deployment and the corresponding
feed-in tariff.
Table 3
COMPARISON OF WIND POWER REMUNERATION AND DEPLOYMENT
|
| 2003
| 2004 | 2005
| 2006 |
|
| New Installations (MW/a) | 2.644
| 2.036 | 1.808
| 2.234 |
| Total Wind Remuneration (Mio. €/a) |
1.696,9 | 2.278,9
| 2.386,3 | 2.734,0
|
| Wind Remuneration (ct/kWh) | 9,06
| 8,93 | 8,76
| 8,90 |
|
| Source: BMU (2007). |
In order to encourage manufacturers to lower their costs,
the tariff is reduced by a certain percentage every year. In the
effective EEG this degression is defined to be 2%. As the degression
is expressed in nominal percent taking account inflation the real
degression amounts to about 4%. Along with the high steel prices,
this increases the pressure for manufacturers to reduce their
costs. Therefore, the degression will be reduced to 1% in the
amendment. Moreover, the starting and the basic tariff will be
increased (see table 4).
Table 4
REMUNERATION COMPARISON BETWEEN EEG 2004 AND 2009
|
| EEG 2004
| EEG 2009 |
|
| ct/kWh
| ct/kWh |
| Starting Tariff | 7,87
| 9,2 |
| Basic Tariff | 4,97
| 5,02 |
| Degression | 2%
| 1% |
| System Bonus | | 0,5
|
|
| Source: EEG (2004), EEG 2009 preliminary (2008).
|
One of the main reasons for the amendment is the currently
high world market price of steel. The high price levels have direct
influence on the turbine costs and cannot be overcompensated by
technology improvements. In addition good quality sites for wind
power deployments in Germany are limited. Slowly the limits are
reached. Only higher tariffs may allow a further wind penetration
which will be located at sides with lower wind speeds.
REPOWERING
As an alternative old wind power plants may be substituted
by new installations—called repowering. Since wind energy
deployment started already in the early 1990s, good quality sites
are mostly occupied by outdated windmills. Therefore, the EEG
tries to encourage investors and operators to repower the existing
sites with newer technologies and increased capacity.
Repowering overview:
Plants which started operation before 31.12.1995
qualify for repowering.
Installed capacity has at least to be tripled.
Starting tariff is extended by two months for every
0.6 % below 150 % of the reference yield.
A site qualifies for repowering if it was at least
10 years in operation.
New capacity has to be between two and five times
the capacity of the old plants.
Starting tariff increased by 0.5 ct/kWh—time
period according to regular new installations.
OFFSHORE WIND
POWER
Basically the same principle as for onshore wind power applies
for offshore wind power as well. Total support is granted for
20 years. In this case, however, the higher staring tariff is
valid for 12 years. It can be expanded according to a greater
distance to the shoreline or a higher water depth. For every further
seamile beyond 12 seamiles, the starting tariff is extended by
0.5 months and for every full metre beyond 20 metres water depth,
the starting period is extended by 1.7 months. Additionally, an
early start bonus of 2.0 ct/kWh is granted in the EEG 2009, if
the site becomes utilised before 31.12.2015. According to the
EEG 2009, the degression of 5% starts in 2015.
Table 4
REMUNERATION COMPARISON BETWEEN EEG 2004 AND 2009
|
| EEG 2004
| EEG 2009 |
|
| ct/kWh
| ct/kWh |
| Starting Tariff | 9,1
| 13 |
| Basic Tariff | 6,19
| 3,5 |
| Degression | 2%
| 5% |
| System Bonus | | 2,0
|
|
| Source: EEG (2004), EEG 2009 preliminary (2008).
|
The main reason for the increased tariff rates is obvious:
By now, in Germany there are no offshore wind parks in operation.
Since offshore wind parks in Germany are going to be constructed
in water depths beyond 20 meters, the constructions are quite
risky. Investors seek to receive higher remunerations for these
risks in order to invest. As soon as projects are realised costs
can be estimated better and risks can be reduced. Therefore, the
high starting tariff of 15 ct/kWh will be reduced after 2015 by
the abolition of the early bonus and the high degression of 5%.
OTHER NEW
ASPECTS OF
THE AMENDMENT
The new EEG 2009 introduces two new elements. First of all,
operators have a choice between two different RES-E sale options.
The first one is the fixed feed-in tariff system. The second option
is the possibility to sell the RES-E on a bilateral basis or via
power exchange. Since the wholesale prices have been relatively
high during the last months in Germany, plants, especially which
receive only the basic tariff (and not the higher starting tariff),
receive higher margins if they sell their RES-E on the wholesale
market. Plant operators can choose on a monthly basis, whether
they want to sell their generated RES-E directly or via fixed
FIT.
The second innovation is a bonus for "system services".
These system services are going to be defined in the near future
and can be services, such as reactive power, voltage control,
reserve power, etc.
Both new elements are motivated by the increasing share of
wind power in the electricity market. The policy makers try to
improve the integration of the wind power RES-E to become more
independent of conventional power technologies.
August 2008
LITERATURE
EEG 2004: Das Erneuerbare Energien Gesetz, 2004, Berlin http://217.160.60.235/BGBL/bgbl1f/bgbl104s1918.pdf.
EEG 2009: Bundestagsbeschluss zum EEG vom 06.06.2008: http://www.eeg-aktuell.de/fileadmin/user_upload/Downloads_Politik/EEG-2009-BWE-Arbeitspapier-neu.pdf.
BMU 2008: Erneuerbare Energien in Zahlen—Nationale
und Internationale Entwicklung, Berlin:
http://www.bmu.de/files/erneuerbare_energien/downloads/application/pdf/broschuere_ee_zah
len.pdf.
BMU 2007: EEG Erfahrungsbericht 2007, Berlin: http://www.erneuerbare-energien.de/files/pdfs/allgemein/application/pdf/erfahrungsbericht_eeg_2007.pdf.
81
The fixed tariff characteristic of the EEG reduces the investment
risk for the renewable investor markedly compared to a more market
based promotion system. This should be taken into account when
comparing reimbursement rates. Back
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