Spotlight on Germany – how will recent reforms ignite the rapid expansion of renewables?
by RES | Sep 20, 2022 | Reading time: 4 min
Following years of slow progress in the expansion of renewable energy in Germany, the largest energy policy amendment in decades has come into force promising an acceleration in renewable energy. What does this really mean for developers, investors and operators?
Earlier this year, Germany’s traffic light coalition launched The Renewable Energy Act (EEG) 2023 and other energy policy measures in what is known as the “Easter Package”. The EEG 2023 will come into effect on 1st January 2023 and is considered urgent in response to the climate crisis coupled with Germany’s dependence on fossil fuels from Russia.
A breakthrough for renewables
The new targets for renewable energy are very welcome and extremely positive with at least 80% of gross electricity consumption to be covered by renewables by 2030 (previously the target was only 65%). This is made up of onshore wind increasing to 215GW (currently 71GW), offshore wind to 30GW (currently 20GW) and solar to 215GW (currently 100GW). We will see a big jump in the volumes of renewable energy auctions issued by the Government for wind and solar in 2023. For instance, 5,850MW of installed capacity for ground-mounted solar will be put out to tender. This compares to 1,650MW stipulated in 2021. For onshore wind, the amendment provides for a tender volume of 12,840MW. In 2021, only 3,000MW was planned for 2023.
To enable the accelerated development and construction of renewable projects, more favourable conditions have been set for the industry. One of particular importance, is the new stipulation that the construction and operation of renewable energy plants including ancillary installations are in the overriding public interest and serve public safety. As a result, the interest of developing and constructing a new renewable energy project, e.g., an onshore wind farm, may prevail over the interest in maintaining a clear view of the landscape. This gives renewables a certain priority in the consideration of stakeholder interests and is intended to speed up the previously lengthy approval procedures.
- Onshore Wind – The government has proposed designating more land for onshore wind development and lowering bureaucratic hurdles that have slowed development in recent years. The sixteen Federal States (the Länder) are now obliged to designate priority areas for onshore wind. By 31st December 2032 at the latest, these are to amount to an average of 2% of the respective state’s area. Currently, only the state of Schleswig-Holstein meets this target with 2% of its area used for wind power. In order to evaluate the progress of these targets, the Länder must prove annually that they have designated sufficient areas to achieve their goals. If the Länder do not meet this obligation, certain obstacles and regulations can be overridden. These sanctions should serve as an incentive for the Federal States to fulfil their obligations.
- Solar – To support the expansion of solar there are now more opportunities to participate in more renewable energy auctions. For instance, “special” ground mounted solar systems including solar systems on car parks, agricultural PV systems and floating PV, which were previously only eligible for funding in the context of innovation tenders, can now participate in tenders for ground mounted systems. The EEG 2023 also enables the promotion of ground-mounted systems on moorland and grassland under certain conditions. In addition, the amendment stipulates an expansion of the area coverage, for example along motorways or railway tracks, and grants further possibilities for the expansion of ground-mounted photovoltaics.
- Offshore Wind – In addition to solar and onshore wind, the construction targets for offshore wind have been raised significantly. In order to achieve them, in addition to the areas that have been pre-surveyed so far by Federal Maritime and Hydrographic Agency (Bundesamt für Seeschifffahrt und Hydrographie – BSH), unsurveyed areas will also be included in renewable energy auctions. 90% of the income from the payments of the bid value will also go into the offshore grid levy and thus reduce electricity costs for consumers. In addition, the remaining 10% of the payments from the bidding procedures should benefit nature conservation and the promotion of sustainable fisheries. Approval procedures are to be accelerated; to this end, it will be legally stipulated that the expansion of offshore wind turbines and offshore connection lines are in the overriding public interest and serves the security of supply.
- Green Hydrogen – The EEG is also promoting a huge ramp-up of hydrogen technology and for the first time will include green hydrogen production plants in renewable energy auctions. This includes tenders for innovative concepts with hydrogen-based electricity storage as well as plants which will generate electricity from green hydrogen. The Federal Network Agency will launch these from 2023, and the stipulated tender volume is to reach 11.8GW by 2028.
- Repowering – With an ageing fleet of wind turbines in Germany, many operators will be faced with the question of what to do with their turbines in the coming years. Technological progress can make repowering worthwhile in many cases. The revised act means that repowering projects, even if they are outside of the wind priority areas, will be treated more favourably up to and including 2030 regardless of whether the Federal State in question has already reached its obligatory land use contribution values.
What does this mean for us?
Whilst there are still some hurdles to overcome, these recent changes will ignite the true power of renewable energy in Germany, helping the country to create greater security of supply and tackle climate change. The increased tendering volume has attracted a new era of development investment. These projects should materialise into construction and operational projects sooner with favourable planning priority given to renewables, not present previously. This step change in the deployment of cheap renewables in Germany will benefit consumers by lowering bills. Municipalities will also see the uptick in economic investment, particularly during construction and the trade tax revenue during operations. Moreover, both operators and investors will benefit from repowering older sites. Whether you are looking to invest in new projects, repower or extend the life of an older site, RES is experienced in every phase of the renewable lifecycle from development and construction through to the operations of projects and can support your needs.