European Commission Approves Germany’s Modified Plan to Support Renewables
The amendment to the scheme will cost Germany €28 billion
December 22, 2022
The European Commission has approved the amendment to a German government’s program called Renewable Energy Act 2023 (EEG 2023), which seeks to extend and modify the country’s support of renewable energy.
The EEG 2023 support program, with an overall budget of €28 billion (~$29.6 billion), aims at achieving a share of 80% of electricity produced from renewable energy sources by 2030, with a view to achieving climate neutrality by 2045. The amended program will come into effect by the end of 2026 and plans to achieve climate neutrality by 2045.
Under the program, Germany has introduced an effective volume control mechanism to encourage innovation in tenders that will be invited to develop rooftop and ground-mounted solar projects along with onshore wind and biomethane projects.
The mechanism will help maintain the tendered volumes for each technology and avoid under-subscription.
In just the last six months, Germany has witnessed that tenders for ground-mounted solar projects have been under-subscribed due to a variety of reasons including price volatility that has made it difficult for developers to procure modules.
The aid under the scheme will take the form of a market premium paid by the network operator to the power producer on top of the market price. For small installations, the aid will be extended through feed-in tariffs.
The beneficiaries will be selected through competitive bidding, wherein tenders will be organized depending on the technology used by the bidders.
As of January 2027, to avoid overcompensating the producers, Germany will completely phase out the support of renewable power production when the demand is lower and the prices fall.
The power produced from onshore wind, biomass, and biomethane in South Germany will help reduce the increased costs of clean energy deployment while ensuring more renewable projects are developed in high-power consumption areas.
The Commission noted that Germany has committed to improving data collection and utilizing ethical environmental conservation methodologies and approved the German program’s modification (amendment).
It considered the aid to be proportionate, which is being granted through a premium based on the lowest bids in a transparent bidding process. The Commission further hailed the introduction of the volume control mechanism in tenders and ruled that it would make the bidding process competitive.
According to the recently published EU Market Outlook, Germany led the European solar sector in 2022 by adding the highest capacity of 7.9 GW. It was followed by Spain with a 7.5 GW solar capacity. The report lists the top ten European solar markets that connected 41.4 GW of new solar capacity to the grids. The continent’s total solar generation capacity jumped by 25% year-over-year to 208.9 GW in 2022.
According to the Federal Network Agency of Germany, the country installed 4.9 GW of solar capacity during the initial nine months of 2022, up year-over-year by 21% compared to 4.02 GW in the same period of the previous year.