Austria’s Draft Electricity Industry Act Disappoints Solar Industry

Austria has released its revised draft of the Electricity Industry Act (EIWG), the country’s largest electricity market reform in 2 decades aimed at accelerating the energy transition. However, some of the proposals have attracted sharp criticism from the country’s renewable energy associations, who see it as leading to higher electricity prices, leaving its energy system vulnerable. 

Among the various measures the proposed draft introduces is peak shaving, which means that when solar PV systems generate excess electricity, to prevent overloading the grid, the amount of power sent into the grid will be temporarily limited to 60%. This will ensure greater grid stability and higher efficiency, according to the government. 

Customers will be able to save money by using power during cheaper periods, especially useful for heat pumps and electric vehicles (EVs) with flexible usage. Large energy suppliers will be required to offer dynamic pricing so that the end consumers benefit from lower prices during times when solar power production is higher.

It also offers faster grid access to new power plants that the Federal Ministry of Economy, Energy and Tourism (BMWET) says can connect gradually.  

Peer-to-peer electricity sharing will be permitted with friends, family and neighbors, even for free, in a bid to control grid costs. Industrial firms will be able to enter bilateral contracts with renewable energy plants through power purchase agreements (PPA). 

“With the new Electricity Industry Act, we want to achieve lower prices, more stable grids, and accelerate the energy transition. This should provide relief for households and businesses and ensure security of supply,” said Austria’s Economics and Energy Minister Wolfgang Hattmannsdorfer, and added, “The electricity market is under pressure – with grid congestion, rising costs, and a lack of access. We are now introducing a modern law that will reduce bureaucracy, facilitate investment, and make our energy system fit for the future.”

Nevertheless, the solar industry is not exactly thrilled with the draft EIWG available on the ministry’s website. The country’s solar energy association, PV Austria, is peeved with the proposal of charging additional grid fees for companies opting to feed-in excess electricity generation. 

This, it argues, will impact around 500,000 operators of private and commercial PV systems as well as any future consumers since they will have to pay this fee. PV Austria believes this creates uncertainty in this market segment.

PV Austria CEO Herbert Paierl believes the draft EIWG is likely to drive up electricity prices. 

“The plan to introduce additional grid fees for feed-in companies is not only extremely shortsighted, but also highly risky for the energy industry,” says PV Austria’s Managing Director, Vera Immitzer. “Flexibility is the electricity system, the need for which is agreed upon by the entire energy industry. Who is supposed to provide flexibility when that comes at an additional cost?” 

The Austrian Renewable Energy Association (EEÖ) has also voiced its opposition to the proposed grid fee, which it says is set to increase even further in the future. “This measure threatens to overshadow the positive elements of the amendment to the law,” opines EEÖ Managing Director Martina Prechtl-Grundnig. It will make the expansion of renewable energy riskier and more expensive.

In sharp criticism of the measure, Prechtl-Grundnig added, “This is the opposite of what we need now: namely, the price-dampening expansion of renewable energies and an electricity market for renewables.”

It demands that the government consult small- and medium-sized electricity producers, seeking their views before finalizing the law.

Earlier this year, Austria abruptly ended the value added tax (VAT) exemption for small PV systems despite protests from the solar industry (see PV Austria Fears ‘Massive Uncertainty’ With New Government’s Measures). 

PV Austria expects the country’s new solar PV installations to decline 20% on an annual basis in Q1 2025 due to new government policies.