Further EU Backing For German Renewable Energy Act

• EC has cleared 3 additional measures to support Germany generate more renewable electricity under EEG 2021
• It includes having an additional tender round for ground mount and rooftop solar with a revised mechanism
• Instead of a fixed payment, renewable energy producers will now be compensated with a sliding market premium to avoid overcompensation for them
• Financial incentives will be introduced to encourage investment in small rooftop solar PV installations to support feeding it into the grid instead of just for self-consumption

The European Commission (EC) has approved new measures to support Germany's Renewable Energy Act (EEG) 2021 including an additional round of ground mounted and rooftop solar tenders in 2022 with a revised mechanism to improve their competitiveness.

The last 2 tender rounds for both ground mounted and rooftop solar were undersubscribed, hence Germany will now bring in a revised mechanism by adjusting the volume of electricity tendered for the additional round (see Germany's 4^th Rooftop Solar Auction Undersubscribed). As per revised mechanism, the EC explains, if the tender is oversubscribed then bids can be awarded at the price offered.

Beyond this, the other measure approved is related to the payment structure for innovation tenders. Instead of a fixed, it will now introduce a sliding market premium that will depend on the evolution of market prices and only covers the gap between the cost of energy production and its market price. In comparison, under a fixed price arrangement, the premium remains fixed irrespective of whether the energy prices rise or fall.

It explained that this change aims to ensure that electricity producers are not overcompensated in times of high electricity prices.

The EC has also given its seal of approval for Germany to introduce financial incentives for consumers to invest in small rooftop solar PV installations. It will be done with a view to feed more electricity into the grid instead of using it solely for self-consumption.

EC's Vice-President in charge of competition policy, Margrethe Vestager said, "These additional measures will further strengthen the objectives of the Renewable Energy Act scheme, while contributing to the reduction of greenhouse gas emissions and supporting the EU Green Deal objectives."

The EC found the aid 'necessary and appropriate' to promote the use of renewable energy sources and reduce GHG emissions, in particular related to solar PV.

Germany aims to achieve 215 GW of solar power capacity by 2030 under EEG 2021 as part of the Easter Package that was cleared by the German cabinet in April 2022 (see German Government Agrees On Higher 2030 Solar Goal Of 215 GW).