German Parliament Passes EEG 2021; Industry Not Happy

• Germany's Parliament Bundestag has approved the EEG 2021 to come into effect from January 1, 2021
• It brings in several changes including encouraging prosumers but also complicating tenders and not backing renewable energy expansion
• Industry associations are not thrilled with the EEG 2021 version passed and insist on making it industry friendly when the government works out details in Q1/2021

Germany has cleared the way for the revision of its Renewable Energy Sources Act (EEG 2021) to be adopted into law with effect from January 1, 2021 after the country's Parliamen (Bundestag) passed the bill with 357 yes pitted against 260 no votes. With the EEG 2021 coming in, Germany is now officially on path towards a 65% share of renewable energy in its total electricity mix by 2030 (see Germany Approves Climate Protection Act 2030).

Some of the salient features of EEG 2021 relevant for solar, as adopted by the German Parliament are:

• Cumulative installed solar PV capacity of the country by 2030 is now envisaged to grow to 100 GW, slightly up from 98 GW proposed previously in its Climate Law (see Germany: Plans For >45 GW Solar Addition From 2021-29). This might even change as the government will work out details regarding targets in Q1/2021.
• Large scale solar systems on commercial rooftops with 300 kW capacity and above will need to participate in auctions to secure permission to build, as against the current limit of 750 kW and above. However, for system generators of 300 kW to 750 kW, if the generators skip participating in auctions, they can expect 50% payment as premium feed-in-tariff (FIT) while the other half of the power generated needs to be self-consumed. System owners of 750 kW and above will continue to enter tenders to claim 20-year fixed tariffs.
• Rooftop solar system owners with up to 30 kW capacity and those with annual solar power consumption for a maximum of 30 MWh will not have to pay the EEG surcharge for the solar power used. This is an improvement from the 10 kW threshold before. Germany solar lobby group BSW-Solar says this will help grow the number of prosumers who can run electric vehicles charged with solar power and heat pumps as well.
• Green hydrogen producers are exempt from paying renewables surcharge. Measures are in place for partial or full exemption.

Not enough

The new version of the EEG aims to gradually wean off the renewable energy industry from state subsidies, steering the market in the direction of becoming self-sufficient, for instance with the help of bilateral power purchase agreements (PPA), but the solar industry at large remains unhappy for a number of reasons.

Although last minute compromises between the two government groups – Conservatives and Social Democrats – have led to notable improvements, industry associations are crying foul over the EEG 21 as they believe that it not only undermines the potential of renewable energy technologies but also creates a negative environment for potential investors.

German Solar Industry Association (BSW) called it a 'missed opportunity for climate protection' as it allows for an annual solar PV addition of less than 5 GW, way less than 10 GW which is what the industry and scientists have been demanding in order to implement the climate goals and avoid a power generation gap.

Criticism also comes from the German Renewable Energy Federation or Bundesverband Erneuerbare Energie e.V. (BEE) that finds fault with the failure to expand renewable energies in the country under EEG 2021. "Empty spaces, construction sites and obstacles characterize this novella. The increase in the expansion path has been postponed, the commitment to the energy transition as a public interest has been re-emphasized and the tenders, once praised as a market-based instrument, have become more complicated and absurd," said BEE President Dr. Simone Peter.

Nevertheless, Germany is set to be the star performer among European Union solar markets with the largest amount of solar PV capacity added, according to the SolarPower Europe's latest report EU Market Outlook for Solar Power 2020-2024. While SPE sees Germany to remain the EU's leading solar market until 2024, they also see annual demand for PV capacity decrease in 2024 due to limitations in the new EEG 2021 (see SolarPower Europe Says EU Added 18.7 GW Solar In 2020).