Act on Granting Priority to Renewable Energy
Sources (Renewable Energy Sources
Act)
Section 1
Purpose
The purpose of this Act is to facilitate a sustainable
development of energy supply in the interest of managing global
warming and protecting the environment and to achieve a substantial
increase in the percentage contribution made by renewable energy
sources to power supply in order at least to double the share of
renewable energy sources in total energy consumption by the year
2010, in keeping with the objectives defined by the European Union
and by the Federal Republic of Germany.
Section 2
Scope of Application
- This Act deals with the purchase of, and the compensation to
be paid for, electricity generated exclusively from hydrodynamic
power, wind energy, solar radiation energy, geothermal energy, gas
from sanitary landfills, sewage treatment plants, mines, or
biomass within the territorial scope of this Act or within
Germany's exclusive economic zone, by utility companies which
operate grids for public power supply (grid operators). The
Federal Ministry of the Environment, Nature Conservation and
Nuclear Safety shall be authorised to lay down rules- in agreement
with the Federal Ministry of Food, Agriculture and Forestry as
well as the Federal Ministry of Economics and Technology - by
adopting an ordinance, which shall be subject to approval by the
German Bundestag. Said ordinance shall specify what substances and
technical processes used in connection with biomass fall within
the scope of application of this Act; in addition, the ordinance
shall lay down the relevant environmental standards.
- This Act shall not apply to electricity
- produced by hydro-electric power plants and installations
fuelled by gas from landfills or sewage treatment plants with an
installed electrical capacity of over 5 megawatts, or by
installations in which electricity is generated from biomass, with
an installed electrical capacity of over 20 megawatts, and
- produced by installations of which over 25 per cent is owned
by the Federal Republic of Germany or one of Germany's federal
states, and
- produced by installations for the generation of electricity
from solar radiation energy, with an installed electrical capacity
of over five megawatts. In the case of installations for the
generation of electricity from solar radiation energy which are
not attached to or built on structures which are primarily used
for purposes other than the generation of electricity from solar
radiation energy, the upper capacity limit specified in the first
sentence above shall be 100 kilowatts.
- New installations shall be installations which were
commissioned after [add: date of entry into force of this Act].
Reactivated or modernised installations shall be considered as new
installations if major components of the installations were
replaced. Modernisation work shall be deemed to be major if the
modernisation costs amount to at least 50 per cent of the
investment cost required to build a completely new installation.
Existing installations shall be installations which were
commissioned prior to [add: date of entry into force of this Act].
Section 3
Obligation to Purchase and Pay
Compensation
- Grid operators shall be obliged to connect to their grids
electricity generation installations as defined in Section 2
above, to purchase electricity available from these installations
as a priority, and to compensate the suppliers of this electricity
in accordance with the provisions in Sections 4 to 8 below. This
obligation shall apply to the grid operator whose grid is closest
to the location of the electricity generation installation,
providing that the grid is technically suitable to feed in this
electricity. A grid shall be considered to be technically suitable
even if - notwithstanding the priority to be granted pursuant to
the first sentence above - a grid operator needs to upgrade its
grid at reasonable economic expense to feed in the electricity; in
this case, the grid operator shall be obliged to upgrade its grid
without delay if this is requested by a party interested in
feeding in electricity. Grid data and data of the electricity
generation installation shall be disclosed where this is necessary
for the grid operator and the party interested in feeding in
electricity to do their planning and to determine the technical
suitability of a grid.
- Pursuant to Sections 4 to 8 below, the upstream transmission
grid operator shall be obliged to purchase, and pay compensation
for, the amount of energy purchased by the grid operator in
accordance with clause (1) above. If there is no domestic
transmission grid in the area serviced by the grid operator
entitled to sell electricity, the next closest domestic
transmission grid operator shall be obliged to purchase and pay
compensation for this electricity as specified in the first
sentence above.
Section 4
Compensation to be Paid for Electricity Generated
from Hydrodynamic Power, Gas from Landfills, Mines, and Sewage
Treatment Plants
The compensation to be paid for electricity generated from
hydrodynamic power and gas from landfills, mines and sewage
treatment plants shall amount to at least 15 pfennigs per
kilowatt-hour. In the case of electricity generation installations
with an electrical capacity of over 500 kilowatts, this shall apply
only to that part of the total amount of electricity fed in during a
given accounting year which corresponds to the ratio of 500
kilowatts to the total capacity of the installation in kilowatts;
the capacity shall be calculated as the annual average of the mean
effective electrical capacity measured in the various months of the
year. The price to be paid for other electricity shall be at least
13 pfennigs per kilowatt-hour.
Section 5
Compensation to be Paid for Electricity Generated
from Biomass
- The following compensation shall be paid for electricity
generated from biomass:
- At least 20 pfennigs per kilowatt-hour in the case of
installations with an installed electrical capacity of up to 500
kilowatts.
- At least 18 pfennigs per kilowatt-hour in the case of
installations with an installed electrical capacity of up to 5
megawatts.
- At least 17 pfennigs per kilowatt-hour in the case of
installations with an installed effective electrical capacity of
over 5 megawatts; however, this provision shall not be effective
before the date of the entry into force of the ordinance specified
in the second sentence of Section 2(1).
The first clause of the second sentence in Section 4 above shall
apply mutatis mutandis.
- As of 1 January 2002, the minimum compensation amounts
specified in (1) above shall be reduced by one per cent annually
for new installations commissioned as of this date; the amounts
payable shall be rounded to one decimal.
Section 6
Compensation to be Paid for Electricity Generated
from Geothermal Energy
The following compensation shall be paid for electricity
generated from geothermal energy:
- At least 17.5 pfennigs per kilowatt-hour if the installation
involved has an installed electrical capacity of up to 20
megawatts, and
- At least 14 pfennigs per kilowatt-hour if the installation
involved has an installed electrical capacity of over 20
megawatts.
The first clause of the second sentence in Section 4 above shall
apply mutatis mutandis.
Section 7
Compensation to be Paid for Electricity Generated
from Wind Energy
- The compensation to be paid for electricity generated from
wind energy shall be at least 17.8 pfennigs per kilowatt-hour for
a period of five years starting from the date of commissioning.
Hence, the compensation to be paid for installations which, during
this period of time, achieve150 per cent of the reference yield
calculated for the reference installation as described in the
Annex to this Act shall be at least 12.1 pfennigs per
kilowatt-hour. For other installations, the period mentioned in
the first sentence above shall be prolonged by two months for
every 0.75 per cent which their yield stays below 150 per cent of
the reference yield. If the electricity is generated by
installations which are located at least three nautical miles
seawards from the baselines used to demarcate territorial waters
and if these installations are commissioned no later than 31
December 2006, the periods specified in the first sentence and in
the second sentence above shall be nine years.
- For existing installations, the date of commissioning as
defined in the first sentence of (1) above shall be [add: the date
of the entry into force of this Act]. For these installations, the
period defined in the first 3 sentences of (1) above shall be
reduced by half of the operating life of an installation as of
[add: the date of the entry into force of this Act]; in any case,
however, this period shall not be less than four years starting
from [add: the date of the entry into force of this Act]. If P-V
curves are not available for such installations, an authorised
institution as defined in the Annex may perform the necessary
calculations on the basis of the design documents of the type of
installation concerned.
- As of 1 January 2002, the minimum compensation amounts
specified in (1) above shall be reduced by 1.5 per cent annually
for new installations commissioned as of this date; the amounts
payable shall be rounded to one decimal.
- For the implementation of the provisions in (1) above, the
Federal Ministry of Economics and Technology shall be authorised
to adopt an ordinance laying down rules for the calculation of the
reference yield.
Section
8
Compensation to be Paid for Electricity Generated
from Solar Radiation Energy
- The compensation to be paid for electricity generated from
solar radiation energy shall be at least 99 pfennigs per
kilowatt-hour. As of 1 January 2002, the minimum compensation paid
shall be reduced by 5 per cent annually for new electricity
generation installations commissioned as of this date; the amounts
payable shall be rounded to one decimal.
- The obligation to pay compensation as specified in (1) above
shall not apply to photovoltaic installations which are
commissioned after 31 December of the year following the year in
which photovoltaic installations which are eligible for
compensation under this Act reach a total installed capacity of
350 megawatts. Prior to the discontinuation of the obligation to
pay compensation as specified in (1) above, the German Bundestag
shall adopt a follow-up compensation scheme which shall enable
installation operators to manage their installations
cost-effectively, taking into consideration the decline of
marginal unit cost achieved by then in the field of system
engineering.
Section 9
Common Provisions
- The minimum compensation amounts specified in Sections 4 to 8
shall be payable for newly commissioned installations for a period
of 20 years after the year of commissioning, except for
installations which generate electricity from hydrodynamic power.
For installations which were commissioned prior to the entry into
force of this Act, the year 2000 shall be considered to be the
year of commissioning.
- If electricity generated from various installations is billed
via a common metering device, the calculation of the amounts of
the different rates of compensation payable shall be based on the
maximum effective capacity of each individual installation. If
electricity is generated from several wind energy converters, the
calculation of the compensation shall - notwithstanding the first
sentence above - be based on the cumulative values of these
installations.
Section 10
Grid Costs
- The costs associated with connecting installations as
specified in Section 2 above to the technically and economically
most suitable grid connecting point shall be borne by the
installation operators. The implementation of this connection must
comply with the grid operator's technical requirements in a given
case and with the provisions laid down in Section 16 of the
Energiewirtschaftsgesetz (Energy Management Act) of 24
April 1998 (Federal Law Gazette I, p. 730). The installation
operator shall be entitled to have the connection implemented
either by the grid operator or by a qualified third party.
- The costs associated with upgrading the grid exclusively in
order to connect new installations in accordance with Section 2
for accepting and transmitting energy fed into the grid for public
power supply shall be borne by the grid operator whose grid will
have to be upgraded. The grid operator shall specify the concrete
investment required by presenting the costs in detail. The grid
operators shall be entitled to add the costs borne by them when
determining the charges for the use of the grid.
- Any disputes shall be settled by a clearing centre which shall
be established within the Federal Ministry of Economics and
Technology, with the involvement of the parties concerned.
Section 11
Nation-wide Equalisation Scheme
- Transmission grid operators shall be obliged to record any
differences in the amount of energy purchased and compensation
payments made under Section 3 above and to equalise such
differences amongst themselves as specified in (2) below.
- By 31 March of each year, the transmission grid operators
shall determine the amount of energy purchased in accordance with
Section 3 above and the percentage share which this amount
represents relative to the overall amount of energy delivered to
final consumers either directly by the operator or indirectly via
downstream grids. If transmission grid operators have purchased
amounts of energy that are greater than this average share, they
shall be entitled to sell energy to, and receive compensation
from, the other transmission grid operators in accordance with
Sections 3 to 8 above, until these other grid operators have
purchased a volume of energy which is equal to the average share
mentioned above.
- Monthly instalments shall be paid in accordance with the
equalisation amounts and payments to be expected.
- Utility companies which deliver electricity to final consumers
shall be obliged to purchase and pay compensation for that part of
the electricity which their regular transmission grid operator
purchased in accordance with the provisions of (2) above. The
first sentence shall not apply to utility companies if, relative
to the total amount of electricity they deliver, at least 50 per
cent of the electricity delivered is electricity as defined in
Section 2 (1) in conjunction with (2) above. The part of the
electricity to be purchased by a utility company in accordance
with the first sentence shall be related to the amount of
electricity delivered by the utility company concerned and shall
be determined in such a way that each utility company will receive
a relatively equal share. The compulsory amount to be purchased
(part) shall be calculated as the ratio of the total amount of
electricity fed into the grid under Section 3 to the total amount
of electricity sold to final consumers; furthermore, it is
necessary to deduct from this sum the amount of electricity
delivered by utility companies in accordance with the second
sentence above. The compensation as specified in the first
sentence above shall be calculated as the average compensation per
kilowatt-hour paid by all grid operators two quarters earlier in
accordance with Section 3. Electricity purchased in accordance
with the first sentence shall not be sold at the compensation paid
in accordance with the fifth sentence, if that electricity is
marketed as electricity pursuant to Section 2 or as comparable
electricity.
- Each grid operator shall be obliged to make available in good
time to the other grid operators the data required to perform the
calculations referred to in (1) and (2) above. Each grid operator
shall be entitled to request that the other grid operators have
their data audited by a chartered accountant or a sworn auditor
appointed by mutual agreement. If no agreement can be reached, the
chartered accountant or sworn auditor shall be appointed by the
President of the Higher Regional Court which has jurisdiction at
the seat of the grid operator eligible to receive equalisation
payments.
Section 12
Progress Report
By 30 June, every two years after the entry into force of this
Act, the Federal Ministry of Economics and Technology shall submit a
report - drafted in consultation with the Federal Ministry of the
Environment, Nature Conservation and Nuclear Safety as well as the
Federal Ministry of Food, Agriculture and Forestry - on the progress
achieved in terms of the market introduction and the cost
development of power generation installations as specified in
Section 2; and by 1 January, every two years after the year of entry
into force of this Act, the Ministry shall, where necessary, propose
adjustments of the compensation amounts specified in Sections 4 to 8
and of their reduction rates, in keeping with technological progress
and market developments with regard to new installations;
furthermore, the Ministry shall propose a prolongation of the period
for calculating the yield of a wind energy converter as specified in
the Annex, based on the experience made with the period defined in
this Act.
Annex
- The reference installation shall be a wind energy converter of
a specific type for which a yield at the level of the reference
yield can be calculated on the basis of P-V curve (power-wind
speed curve) measured by an authorised institution at the
reference site.
- The reference yield shall be the amount of electricity which
each specific type of wind energy converter, including the
respective hub heights, would yield during five years of operation
- calculated on the basis of measured P-V curves - if it were
built at the reference site.
- The type of a wind energy converter shall be defined by the
model designation, the swept rotor area, the rated power output
and the hub height as specified by the manufacturer.
- The reference site shall be a site determined by means of a
Rayleigh distribution with a mean annual wind speed of 5.5 metres
per second at a height of 30 metres, a logarithmic wind shear
profile and a roughness length of 0.1 metres.
- The P-V curve shall be the correlation between wind speed and
power output (irrespective of hub height) determined for each type
of wind energy converter. P-V curves shall be determined in
accordance with the standard procedure defined in the
Technische Richtlinien für Windenergieanlagen (Technical
Guidelines for Wind Energy Converters), rev. 13, as of 1 January
2000, published by Fördergesellschaft Windenergie e.V.
(FGW), Hamburg, or in the Power Performance Measurement Procedure,
version 1, published in September 1997 by the Network of European
Measuring Institutes (MEASNET), Brussels/Belgium,. P-V curves
which were determined by means of a comparable procedure prior to
1 January 2000 can also be used instead of P-V curves as specified
in the second sentence, providing that the construction of wind
energy converters of the type to which they apply is not initiated
within the territorial scope of this Act after 31 December
2001.
- Measurements of the P-V curves and calculations of the
reference yields of different types of wind energy converters at
reference sites shall be carried out for the purposes of this Act
by institutions which are accredited for the measurement of P-V
curves as defined in (5) above in accordance with the General
Criteria for the Operation of Test Laboratories (DIN EN 45001) of
May 1990. The names of these institutions shall be published in
the Federal Official Gazette by the Federal Ministry of Economics
and Technology for the information of interested parties.
Explanatory
Memorandum
A. General Provisions
For the sake of protecting the environment and managing global
warming as well as guaranteeing a reliable energy supply, the German
Federal Government and the German Bundestag - in agreement with the
European Union - have set themselves the objective of at least
doubling the percentage share of renewable energy sources in total
energy supply by the year 2010. This objective is related to the
envisaged commitment on the part of the Federal Republic of Germany
to reduce greenhouse gas emissions by 21 per cent by the year 2010
in the framework of the European Union's burden sharing as laid down
in the Kyoto Protocol to the Framework Climate Convention of the
United Nations; and this objective is linked to the German Federal
Government's objective to reduce carbon dioxide emissions by 25 per
cent by the year 2005, relative to 1990.
In order to attain this objective, it is necessary to mobilise
the so-called new renewable energy sources. Traditional
hydrodynamic power from large dams accounts for the overwhelming
share of the renewable energy sources used today. For geographical
reasons, the utilisation potential of hydrodynamic power is largely
exhausted. For this reason, it is necessary additionally to generate
electricity from wind energy, solar radiation energy, biomass, and
hydrodynamic power of rivers in order to attain the objective set
for Europe as a whole by the year 2010. To this end, the currently
used potential of these energy sources will have to grow fivefold.
In order to translate this objective into reality, the European
Commission has proposed a number of energy policy measures in its
communication entitled "The Energy Policy Dimension of Climate
Change", in which renewable energy sources play a key role. The
purpose of the Act on Granting Priority to Renewable Energy Sources
(Renewable Energy Sources Act) is intended to help attain these
objectives and to implement the European Union's "Campaign for a
Breakthrough of Renewable Energy Sources". In view of growing
meteorological evidence of a warming of the Earth's atmosphere and
the increase in the frequency of natural disasters world-wide,
prompt action by the legislator is indispensable in the interest of
protecting the environment and managing global warming.
Currently, renewables are unevenly and insufficiently used,
although many renewable energy sources are available in large
quantities. Despite their considerable economic potential, they
account for an extremely low share of the total, statistically
identified gross domestic energy consumption. If we fail to cover a
much larger share of our energy requirements by means of renewable
energy sources, there will be two consequences: not only will we
find it more and more difficult to meet our obligations in the
fields of environmental protection and global warming management, at
both European and international level, but we will also miss out on
major economic development opportunities. Renewables are domestic
energy sources which can help to reduce our dependence on energy
imports, thereby making our energy supply more reliable. Currently,
the EU depends on energy imports to cover approximately 50 per cent
of its energy consumption; and there is a risk that this figure will
rise to 60 per cent by the year 2010 and 70 per cent by the year
2020 if we do not tap the potential of renewable energy sources.
Greater use of renewable energy sources will create jobs,
especially in the sector of small and medium-sized enterprises,
which play a crucial role in the economic structure of the Federal
Republic of Germany. Small and medium-sized enterprises are not only
an important factor in crafts and trades; they also provide an
impetus for a variety of industries, including the metal industry,
electrical engineering, mechanical engineering, engine and equipment
engineering, as well as the building materials industry. The
stimulation of the use of biomass for electricity generation
associated with the adoption of this Act will also provide a major
impetus for an economic recovery of the agricultural sector.
Furthermore, the production and use of renewable energy sources will
promote sustainable regional development, which will help to improve
the social and economic cohesion within the Community and to
harmonise living conditions within the Federal Republic of Germany.
In three European countries - Germany, Denmark and Spain -
national legislation has been adopted to introduce minimum prices
for feeding into grids electricity generated from renewable energy
sources. It is owing exclusively to the national legislation of
these three countries that the European Union witnessed the
emergence of a wind turbine manufacturing industry which offers
cutting-edge technology in the world market today. This also proved
that it was wrong to assume that the introduction of minimum price
systems would hamper productivity, because in all the three
countries mentioned above the introduction of wind energy converters
was based on minimum prices guaranteed by law. This has stimulated a
market development - initially in the wind energy sector - which led
to an efficient industry with considerable export opportunities,
which has created jobs for over 20,000 people in Germany alone. As a
result of the associated economies of scale and the global
competition initiated among manufacturers of wind energy converters,
production costs as well as the compensation paid in real terms have
been successfully reduced by 50 per cent since 1991. Owing to
technological progress, there is growing demand in the world market;
in the next ten years, demand for wind energy converters alone may
amount to over 100,000 megawatts. Against this background, the
market introduction of renewable energy sources should not be
underestimated in terms of its importance for industrial policy, not
least because it can be safely assumed in view of global climate
problems that there will be rapidly growing demand world-wide. It
can be expected that the impact which the Renewable Energy Sources
Act will have on other sectors in which renewable energy sources are
used will be similar to the effects which it will have on the wind
energy sector.
In the past, the Stromeinspeisungsgesetz für Erneuerbare
Energien (Act on Feeding into the Grid Electricity Generated
from Renewable Energy Sources), which entered into force on 1
January 1991, has mainly provided an impetus for the wind energy
sector because the compensation rates laid down in the Act made this
possible. By the end of 1999, i.e. nine years after the entry into
force of the Act, as much as approximately 4,400 megawatts had been
installed within the territorial scope of the Act, accounting for
about one-third of the capacity installed world-wide. For
hydro-electric power plants below the capacity limit of five
megawatts laid down in this Act, the compensation rates specified
have been more or less sufficient to permit cost-effective
operation. Nevertheless, the Act has not brought about a level of
utilisation of the existing potential that would be comparable to
the use of wind energy because there are still many licensing
obstacles that are beyond the scope of this Act; at least the Act
has helped to stabilise the potential of hydro-electric power plants
which was partially jeopardised before the entry into force of this
Act. However, the compensation rates have not been sufficient to
stimulate a large-scale market introduction of electricity generated
from other sources, especially photovoltaic cells and biomass. For
this reason, the compensation rates have been modified in the
Renewable Energy Sources Act, which replaces the Electricity Feed
Act, in order to promote large-scale generation of electricity from
all kinds of renewable energy sources.
However, the adoption of the Renewable Energy Sources Act has
also become necessary for other reasons:
- The coupling of the current compensation rates to the
development of the power rates can no longer be maintained without
risking a disruption in the use of renewable energy sources. The
non-simultaneity of liberalisation in the various national
electricity markets of the European Union without any practicable
reciprocity clauses between markets that are already fully
liberalised and others which are still protected; the abundance of
capacity which was created without risk during the days of
territorial monopolies and which has been largely written off; the
fact that the "unbundling" of electricity generation, transmission
and distribution is far from being implemented; the competitive
advantages enjoyed by the German utility corporations due to the
fact that they can use their tax-free nuclear provisions (which by
now amount to over DM 70 billion) at their discretion for
investments: for all of these reasons, it is not likely that a
price will settle down in the electricity market which will
reflect the actual medium-term and long-term costs of electrical
power supply. For this reason, it is initially necessary to set
fixed prices for renewable energy sources in order to safeguard a
continuous increase in the use of renewable energy sources, which
is undeniably necessary.
- The Electricity Feed Act currently in force has led to an
unequal distribution of burdens among the utility companies which
are obliged to pay compensation. The percentage "capping" of the
amount of electricity that can be fed into the grid, which was
introduced with the second amendment of 1998, needs adjusting
because this upper limit brings the utilisation of wind energy in
the northern German region already close to the point of market
introduction. The purpose of the Renewable Energy Sources Act is
therefore to abolish this upper limit, while at the same time
introducing an non-bureaucratic mechanism that will evenly
distribute extra cost among all utility companies.
- Since the previous Electricity Feed Act was aimed at utility
companies which could act as producers, regional grid operators
and distributors at the same time, it is now necessary because of
the new energy management legislation to redefine both the
addressee of electricity to be fed into the grid and the company
obliged to pay compensation.
The compensation scheme defined in the Renewable Energy Sources
Act is based on the systematic approach introduced in the
Electricity Feed Act and guided by the recommendations presented by
the European Commission in its White Paper on "Energy for the
Future: Renewable Sources of Energy" as well as the relevant
resolutions adopted by the European Parliament. The compensation
rates specified in the Renewable Energy Sources Act have been
determined by means of scientific studies, subject to the proviso
that the rates identified should make it possible for an
installation - when managed efficiently - to be operated
cost-effectively, based on the use of state-of-the-art technology
and depending on the renewable energy sources naturally available in
a given geographical environment. However, there is no guarantee
that the cost of a given installation will be covered.
In some cases, the cost of the production of renewable energy
sources is still much higher than the production cost of
conventional energy sources. This is largely due to the fact that
the overwhelming share of the external costs associated with the
generation of electricity from conventional energy sources is not
reflected in the price; instead, these costs are borne by the
general public and by future generations. In addition, conventional
energy sources still benefit from substantial governmental subsidies
which keep their price artificially low. Another reason for the
higher costs is the structural discrimination of new technologies.
Their lower market share does not allow economies of scale to become
effective. Lower production volumes lead to higher unit cost and
thus reduce competitiveness, which in turn prevents higher
production volumes, like in a vicious circle.
For this reason, the purpose of this Act is not only to protect
the operation of existing installations but also to break this
vicious circle and to stimulate a dynamic development in all fields
of electricity generation from renewable energy sources. In
combination with measures aimed at internalising external costs, the
purpose of this pricing regime is to bring renewable energy sources
closer to conventional energy sources in terms of their
competitiveness. In order to continue to facilitate major
improvements in technological efficiency, the compensation rates
specified in the Renewable Energy Sources Act vary, depending on the
energy sources, the sites and the installation sizes involved;
furthermore, they will decline over time and will remain in effect
for a limited period of time. The fact that the rates will be
reviewed every two years guarantees that they will be updated
continuously and at short intervals to reflect market and cost
trends.
The German Bundestag and the German Federal Government feel - in
line with the established practice of the European Court of Justice
- that the Renewable Energy Sources Act does not constitute aid
granted by a Member State or through state resources as defined in
Article 87 of the Treaty Establishing the European Community
(ECT).
In accordance with the wording of Article 87 ECT, the European
Court of Justice has consistently ruled that the only benefits which
can be regarded as state aid as defined in the Treaty are benefits
which are granted - directly or indirectly - from state resources.
This obviously does not apply to the Renewable Energy Sources Act.
It does not imply any benefits in cash or kind to be made available
- either directly or indirectly or subsequently - by public
authorities, nor does it imply any renunciation of tax revenues or
other payments in cash or in kind owed to the public sector.
Instead, the compensation payments made are straightforward
financial transfers which, in accordance with the 'polluter pays'
principle laid down in Community law, are used directly to cover
electricity production costs. In a case involving a similar pricing
regime, the European Court of Justice therefore stated quite clearly
that a measure which is characterised by the fact that minimum
prices are set with the objective of benefiting the seller of a
product exclusively at the expense of the consumer did not
constitute state aid.
In addition, compensation paid under this Act cannot be state aid
from a terminological perspective because operators of installations
for the generation of electricity from renewable energy sources are
not granted any benefits; instead, the Act compensates disadvantages
which such operators have in comparison with conventional
electricity producers. After all, most of the social and ecological
follow-up costs associated with conventional electricity generation
are currently not borne by the operators of such installations but
by the general public, the taxpayers and future generations. The
Renewable Energy Sources Act merely reduces this competitive
advantage which conventional electricity generators have vis-à-vis
operators generating electricity from renewable energy sources which
cause only limited external costs.
In no other field is the introduction of a pricing regime at the
expense of polluters more legitimate and more justifiable than in
the field of energy supply because of the ecological damage
associated with conventional electricity generation. The Renewable
Energy Sources Act, which is designed to promote the market
introduction of emission-free and sustainable energy sources to
substitute for conventional energy sources, provides for strictly
consistent, equal burden sharing among all power suppliers. This is
in keeping with the 'polluter pays' principle established in
environmental protection. This principle is part and parcel of the
primary law laid down in the EC Treaty, which in its Article 6
stipulates compliance with ecological interests.
The Renewable Energy Sources for which the Act provides
compensation payments cannot be obtained anywhere at lower prices.
For this reason, the pricing scheme specified in the Act is not an
instrument for artificially supporting the "commodity" kilowatt-hour
of electricity generated from renewable energy sources; instead, the
prices specified in the Act will permit operators to manage their
installations cost-effectively in the first place.
The key regulatory element contained in the Renewable Energy
Sources Act is the obligation to purchase electricity generated from
renewable energy sources, based on the amount of electricity
generated during a calendar year, calculated as a ratio of the total
amount of electricity sold. Such obligations are usually imposed
when the movement of goods poses serious risks to external interests
and when those who are responsible for such risks are not expected
to take any voluntary action or sufficient action to prevent such
risks. The consumption of electricity in the free market poses such
risks to the climate and to the environment. Hence, the Renewable
Energy Sources Act can be characterised as a protective standard.
Such standards are quite commonly used without this constituting
state aid: The fact that it is prohibited to sell alcoholic
beverages to adolescents, for instance, does not constitute state
aid for non-alcoholic beverages. And systematically reducing the
price of lead-free petrol despite higher production costs does not
constitute state aid; instead, it is a buying and investing
incentive based on the 'polluter pays' principle.
The provisions of the Renewable Energy Sources Act are based on
Directive 96/92/EC of the European Parliament and the Council of 19
December 1996 concerning common rules for the internal market in
electricity, in particular Articles 3 (2), 7 (5), 8 (3) and (4), as
well as Art. 11 (3); furthermore, these provisions are designed to
implement Article 20a of the German Constitution, which stipulates
that, as a responsibility vis-à-vis future generations, natural
resources must be protected because they are the very basis of human
survival; and finally, the provisions are aimed at implementing the
environmental protection objectives laid down in Articles 2, 6, and
10 of the Treaty Establishing the European Community.
B. Special Provisions
Section 1
Paragraph 1
Paragraph 1 specifies the purpose of this Act. The Act is
designed to achieve sustainable energy supply in the interest of
protecting the environment and managing global warming. Hence, it is
an instrument for the implementation of the objectives agreed in the
United Nations Framework Climate Convention and for the
implementation of the climate strategies pursued by the European
Union and the Federal Republic of Germany.
Paragraph 2
The objective of doubling the percentage share of renewable
energy sources in total energy supply was already stipulated in the
European Commission's White Paper on "Energy for the Future:
Renewable Sources of Energy", and it has been confirmed by the
Council of Ministers. The German Federal Government has also
endorsed this objective. And the Renewable Energy Sources Act is
evidence of the German Bundestag's explicit support of this
objective.
In the next few decades, renewable energy sources will have to
make relevant contributions to energy supply and thus to global
warming management. Hence, in the interest of sustainable energy
supply, it will be necessary in the next decade to double or triple
the contribution made by renewable energy sources to electricity
generation. The European Commission feels that renewable energy
sources should account for 23.5 per cent of total European power
supply by the year 2010. Germany - where renewable energy sources
currently account for approximately six per cent of the national
power supply - is far below the European average.
Section 2
Paragraph 1
Paragraph 1 provides a positive list of the renewable energy
sources to which this Act applies. Like the Electricity Feed Act, it
covers hydrodynamic power, wind energy, landfill gas, gas from
sewage treatment plants, and biomass.
The term "solar energy", which was still used in the Electricity
Feed Act, has been replaced by "solar radiation energy", which is
correct in terms of physics. The installations which this term
refers to include in particular photovoltaic installations and
installations for solar thermal electricity generation.
Geothermal energy, which had not been covered by the Electricity
Feed Act, has been added to the scope of application of this Act in
order to render the vast potential of geothermal energy accessible
for use.
The use of mine gas for electricity generation will improve the
carbon dioxide and methane balance, relative to the release of these
substances into the atmosphere without utilising them. For this
reason, mine gas was included in the scope of application of this
Act.
In this Act - like in the Electricity Feed Act - hydrodynamic
power means the use of original, renewable hydrodynamic power in
run-of-river and storage power stations fed exclusively from natural
water resources.
The term "biomass" has not been conclusively defined. However,
with a view to the purpose of this Act as specified in Section 1, it
certainly does not include fossil fuels such as oil, coal and gas
which will not be renewed within reasonable periods of time. The
term "biomass" comprises solid, liquid and gaseous fuels which
originate in recently harvested crops including timber and harvest
residues, as well as waste wood and organic waste from food
production and animal husbandry.
This Act maintains the principle of exclusive use introduced in
the Electricity Feed Act. According to this principle, privileges
under the Act will be granted only to those forms of electricity
generation which are based exclusively on the use of the energy
sources specified, unless the generation of electricity from
renewable energy sources is only possible in the presence of priming
or supporting fuels. As a general rule, it is not in keeping with
the principle of exclusive use if materials such as harbour sludge,
surface-treated railway sleepers, particle boards with synthetic
components or other types of contaminated waste wood are used for
the generation of electricity. In accordance with the purpose of
this Act as specified in Section 1, the key criterion is that the
electricity generation process used should not compromise the
environment or the climate. In order not to rule out from the very
beginning processes which make ecological and economic sense but
which are still under development, und in order to correct misguided
developments where necessary, the Federal Ministry of the
Environment, Nature Conservation and Nuclear Safety will be in
charge of monitoring and reviewing developments; and the Ministry is
authorised to adopt provisions which will specify what substances
and technical processes in the biomass segment fall into the scope
of application of the Act, and what environmental standards will
have to be observed. What is important for the legislator in the
final analysis is that the various processes used should make sure
that the harmful substances contained in the biomass will, as far as
possible, be accumulated in the residues instead of being released
to the environment via the atmosphere or water.
In all other respects, the provisions of the Gesetz zum Schutz
vor schädlichen Umwelteinwirkungen durch Luftverunreinigungen,
Geräusche, Erschütterungen und ähnliche Vorgänge
(Bundesimmissionsschutzgesetz - Act for the Protection
against Harmful Environmental Effects Caused by Air Pollution,
Noise, Vibration and Similar Factors - Federal Ambient Pollution
Control Act) as well as the relevant implementing regulations will
apply. In addition, an implementing regulation for the
Kreislaufwirtschafts- und Abfallgesetz (Recycling and Waste
Management Act), which will deal with the treatment of waste wood,
is in the process of being prepared.
The scope of application of the Act also covers biogas which is
generated elsewhere and fed into the gas network when such biogas is
used for electricity generation, providing that proof is furnished
of the origin of this gas and providing that there are calculations
which prove that the energy content of the gas quantity used is
equal to the energy content of the biogas quantity fed into the
network.
The scope of application of the Act is extended to include the
exclusive economic area located outside the 12-mile zone in order to
facilitate the implementation of offshore wind projects in this
area.
The term "grid operator" is used as defined in the Gesetz über
die Elektrizitäts- und Gasversorgung (Electricity and Gas Supply
Act). It should be emphasised that only operators of public supply
grids are obliged to purchase and pay compensation for electricity
fed into their grids.
Paragraph 2
Paragraph 2 specifies electricity generation installations which
are excluded from the scope of application of this Act. Like the
Electricity Feed Act, the present Act does not cover large-scale
hydro-electric power plants, as well as large installations
generating electricity from landfill gas and gas from sewage
treatment plants. On the one hand, this is because it can be assumed
that large-scale installations can be operated cost-effectively even
without being included in the scope of application of this Act; and
on the other hand, it is intended that especially decentralised
smaller installations should become the pillar of future energy
supply.
As far as electricity generation from biomass is concerned, this
Act covers a wider range of installations than previous legislation.
The scope of application covers biomass installations with a
capacity of up to 20 megawatts in order to tap additional potential
and mobilise efficiency reserves.
In addition, physically separate installations will be treated
separately in terms of the scope of application, even if they use a
common line to feed in electricity.
In the interest of equal treatment, the scope of application now
also covers installations operated by electricity producers which
had been excluded in the past. The "unbundling" of the activities of
producers, regional grid operators and distributors, which the new
energy legislation calls for, legally puts producers of electricity
from renewable energy sources on an equal footing with conventional
electricity producers. As a result, all producers will be motivated
to invest in renewable energy sources.
In addition, there is a limitation for installations used for the
generation of electricity from solar radiation energy. The purpose
of this limitation is to prevent a continuation of the sealing of
open spaces. The building structures specified in the Act which are
covered by the rules on compensation include roofs, facades, noise
protection walls and in some cases also embankments not exclusively
designed for the purpose of electricity generation from solar
radiation energy.
Paragraph 3
Paragraph 3 defines the terms "existing installations" and "new
installations" as used in this Act. These definitions are
particularly relevant for wind energy converters. Hence, the
yardstick for determining the investment cost associated with the
construction of a new installation is only the cost incurred above
the foundation level.
Section 3
Paragraph 1
The obligation to connect electricity generators, purchase their
electricity and pay compensation for the electricity purchased is
now incumbent upon the grid operator whose grid is geographically
closest to the electricity generator. This makes more economic sense
than the reference to supply areas found in the provisions of the
Electricity Feed Act.
The grid operators still are the right addressees for the
obligation to connect electricity generators, purchase electricity,
and pay compensation for, the electricity purchased because they own
a natural monopoly which in practice is not jeopardised by the
deglomeration of utility companies and the liberalisation of the
electricity market.
It is clearly stated that the obligation to purchase, and pay
compensation for, electricity is not limited to "excess
electricity"; instead, this obligation applies to the entire amount
of electricity offered to the grid operator.
In line with the European Union's Internal Market for Electricity
Directive, the Act stipulates that renewable energy sources should
be granted priority when purchasing and paying compensation for
electricity. Consequently, grid operators cannot refuse to purchase
and pay compensation for electricity generated from renewable energy
sources by stating that the power supply requirements of their grids
are already fully met by means of conventionally generated
electricity. For the same reason, it will only be necessary to
expand the grid if the grid's power supply requirements are already
fully met by means of electricity generated from renewable energy
sources. This will tend to be the exception to the rule. For this
reason, it is justified that the grid operator in this rare case
will be obliged to upgrade the grid if an eligible electricity
generator, as defined in this Act, wants to feed in electricity. In
keeping with the principle of proportionality, this obligation on
the part of the grid operators is limited by what is economically no
longer reasonable.
Since both grid operators and electricity generators interested
in feeding in electricity have to carry out complex planning
processes and take decisions affecting the use of their assets, both
are obliged to provide to the other the data required.
Paragraph 2
The transmission grid operator which is upstream from the grid
operator as defined in paragraph 2 is obliged to accept the
electricity purchased by the grid operator under this Act, and to
pay compensation for this electricity as specified in Sections 4 to
8.
Sections 4 to 8
The compensation scheme laid down for all renewable energy
sources which are within the scope of application of this Act is
guided by the principle that operators of optimised installations
for the generation of electricity from renewable energy sources
should generally be enabled to run these installations
cost-effectively when these are managed efficiently. The most
important factors included in the calculation of the compensation
rates are the investment cost, the operating cost, the metering cost
and the cost of capital for a specific type of installation relative
to the service life, as well as the market return on capital
employed.
In order to limit the administrative effort required- especially
for the parties feeding electricity into the grid from small
decentralised installations, but also for grid operators and
governmental authorities - the Act upholds the principle of applying
a uniform compensation rate nation-wide because this dispenses with
the need for examining the cost or controlling the economic
efficiency of electricity generating installations on a case-by-case
basis. Such a lump-sum approach cannot and will not guarantee that a
profitable compensation will be paid in every single case. For this
reason, the compensation rates specified in this Act are minimum
amounts; hence, higher compensation rates can be paid as a means of
systematically promoting specific technologies. In this way, it is
possible to attain the objectives pursued by this Act more
effectively than by exclusively applying the lump-sum provisions
contained in this Act.
It is up to the Federal Ministry of Economics and Technology - in
agreement with the Federal Ministry of the Environment, Nature
Conservation and Nuclear Safety and the Federal Ministry of Food,
Agriculture and Forestry - to monitor developments in this field
and, where necessary, to propose differentiated adjustments of the
compensation rates to be paid for new installations in accordance
with Section 12 of this Act.
In order to allow for technological progress and the expected
reduction of costs, the compensation rates will be subject to
nominal degressive annual reductions as of the year 2002; these
reductions - which will apply across the board to all electricity
generating installations built in the same year - will amount to 1
per cent for biomass, 1.5 per cent for wind energy, and 5 per cent
for photovoltaic energy. As far as installations for the generation
of electricity from hydrodynamic power, landfill gas, mine gas and
gas from sewage treatment plants are concerned, on the other hand,
their cost reduction potential has already largely been exhausted.
The remaining cost-cutting potential will be adequately covered by
the inflation rate. Currently, there is no need to introduce
specific provisions for geothermal electricity generating
installations because it will take some years before such systems
will be operational.
With the exception of wind energy converters, existing and newly
built installations will be treated alike. This general rule does
not apply to wind energy converters because under the former
Electricity Feed Act, the latter have already benefited from
compensation payments which have permitted a cost-effective
operation of such installations at suitable sites. For this reason,
the period of time during which the higher initial compensation rate
applies is reduced from five to four years for existing wind energy
converters. This should be sufficient to safeguard existing
installations.
Section 4
The provisions contained in the Electricity Feed Act with regard
to electricity generation from hydrodynamic power, landfill gas and
gas from sewage treatment plants have essentially been maintained
because they have proven to be effective in the past; the scope of
these provisions was extended to include installations generating
electricity from mine gas.
Section 5
The use of biomass for the purpose of electricity generation
represents a hitherto inadequately used potential to supply energy
in a way which does not lead to an adverse impact on the climate. At
the same time, biomass provides additional perspectives for the
domestic agriculture and forestry. The compensation rates have to be
increased substantially above the rates laid down in the Electricity
Feed Act in order to enable operators of biomass installations to
operate their installations cost-effectively, thereby initiating a
dynamic development. Compensation rates differ in accordance with
the electrical capacity of installations in order to give due
account to the fact that the power production costs of smaller
decentralised installations are higher.
The provision to the effect that compensation will not be paid
before the entry into force of the ordinance applies only to
electricity generating installations with a capacity of over five
megawatts. Compensation for electricity from installations with a
capacity less than 5 megawatts will be paid after the entry into
force of this Act.
Section 6
The use of geothermal energy for the purpose of electricity
generation depends on the presence of a reliable legal setting for
investors; the purpose of the provisions in Section 6 is to create
such a setting.
Section 7
The previous provisions applying in the field of wind energy
systems did not give due account to the differences prevailing
between various sites. In the amended version of the relevant
provisions, different compensation rates are specified; irrespective
of the type of technology used, the rates vary as a function of site
profitability. Compared to the previous provisions, the new
provisions - when applied to electricity generating installations
over a service life of twenty years - on balance lead to the
following results: at very good sites, compensation rates will be
reduced to 13.5 pfennigs per kilowatt-hour; at sites with average
wind conditions, the rates will be stabilised at 16.4 pfennigs per
kilowatt-hour, and at inland sites, the rates will be moderately
increased to 17.3 pfennigs per kilowatt-hour. The purpose of these
new provisions is to avoid payment of compensation rates that are
higher than what is required for a cost-effective operation of such
installations, and to create an incentive for installing wind energy
converters at inland sites. Compensation rates differ because of the
different periods of time during which the initial compensation
rates will be paid. In addition, the higher initial compensation
rate will facilitate the financing of wind energy converters which
was increasingly being questioned by credit institutions when the
previous provisions were in force.
The period during which the higher initial compensation rate will
be paid is calculated by means of a comparison with a reference
installation. This calculation is based on the P-V curve of the
reference installation, determined either in accordance with the
technical guidelines for wind energy converters published by
Fördergesellschaft Windenergie (FGW - Association for the
Promotion of Wind Energy) or in accordance with the Power
Performance Measurement Procedure defined by the Network of European
Measuring Institutes (MEASNET), which was funded by the European
Commission. The purpose of the provisions concerning the key
features to be used to determine identical installation models is
first of all to prevent manipulation by turbine manufacturers or
operators; and secondly, the provisions are designed to clarify that
it will not be necessary to repeat the calculation every time the
installation is modified.
The following example may help to illustrate how to calculate the
prolongation of the period during which the higher initial
compensation rate will be paid: A site with a reference yield of 144
is six percentage points below the reference level of 150. Divided
by 0.75 per cent of the reference yield, as specified in the
provisions of Section 7 (1), these six percentage points give 8,
which must then be multiplied by 2 months, again as specified in the
provisions. The result is 16 months, which must be added to the
basic period of five years. Hence, the higher compensation rate will
be paid for a period of 6 years and 4 months.
The electricity production costs of offshore wind energy
converters are expected to decrease substantially in the future. At
present, however, the investment cost is much higher than the cost
of onshore installations due to the lack of experience, higher
expenses for new converter models, complicated foundation work and
the lack of economies of scale. The purpose of the special
provisions for offshore installations, which will be in effect for a
limited period of time, is to make up for this shortcoming and to
create incentives for investments. The relevant provisions apply to
wind energy converters which are located at least three nautical
miles seawards from the baselines. However, the resulting line is
not completely identical with the seaward demarcation line of the
former three-mile zone.
Section 8
Paragraph 1
In the long term, the use of solar radiation energy holds the
greatest potential for providing energy supply which does not have
an adverse impact on the climate. This energy source both requires
sophisticated technology and will attain considerable economic
importance in the future. The relatively high compensation rate is
due to the fact that, because of insufficient demand, these
electricity generating installations are currently not yet produced
in sufficient quantities.
As soon as this Act has created sufficient demand, the large
production volumes which will result can be expected to lead to a
substantial reduction in manufacturing cost, and hence, in
electricity production cost, so that the compensation rates can be
allowed to decrease rapidly. In addition to the real reduction of
compensation payments due to inflation, the development described
above is anticipated in this Act by stipulating degressive
compensation rates. For electricity generating installations which
will become operational after 1 January 2003 and in subsequent
years, the compensation rates - for newly commissioned installations
only - will once again be reduced degressively by five percent.
In combination with the "100,000 Roofs Programme", the provisions
in Section 8 (1) lead to compensation payments which for the first
time make electricity generation from solar radiation energy an
attractive option for private investors; however, in many cases, the
compensation specified does not permit a profitable operation of
such installations at all times. The level of compensation has also
been influenced by the compensation rates currently paid in Spain.
In this context, it should be borne in mind that solar radiation
intensity is much greater in Spain than in Germany.
Paragraph 2
For electricity generated from solar radiation energy, the
obligation to pay the compensation rates specified in Section 8 (2)
will end as of 31 December of the year following the year in which
the total installed capacity of photovoltaic installations which are
eligible to receive compensation under the present Act surpasses the
limit of 350 megawatts. The waiting period of twelve months has been
introduced in order not to create any uncertainty in the market and
to enable market players to prepare for a smooth transition. The
limit of 350 megawatts was calculated by adding the 300-megawatt
target of the "100,000 Roofs Programme" to the capacity of the
currently installed base.
In the framework of the present Act, the German Bundestag will
introduce provisions for compensation payments to be made during the
follow-up period to ensure that cost-effective operation of
photovoltaic installations will be possible - giving due account of
the decline in the marginal unit cost achieved by then - and to
ensure that the photovoltaic sector will grow at an increasing pace.
Section 9
Paragraph 1
The fact that compensation payments are limited to a period of 20
years is in keeping with calculation formulas and amortisation
cycles commonly used in the energy sector. Only in the case of
hydroelectric power is this period usually not sufficient to
safeguard the profitability of the installations.
The fact that the period during which compensation will be paid
for electricity generated from already existing installations is
calculated as of 1 January 2000 is designed to protect the installed
base of operators of such existing installations.
Paragraph 2
If electricity supplied from several wind energy converters is
billed on the basis of a single metering device, these electricity
generating installations will be treated as a single entity for the
purpose of determining the level of the compensation to be paid.
Section 10
Paragraph 1
The provisions concerning the connection charges are designed to
avoid legal disputes, and hence, to provide transparency and legal
certainty.
If another grid, which is not used for public power supply, is
located between an electricity generating installation and a grid
whose operator is obliged to purchase electricity under the
provisions of this Act, the electricity generating installation can
be connected to this other grid if this is technically feasible.
This will help to avoid cost which would not make any economic
sense.
Paragraph 2
In line with the rules introduced in Denmark in 1997 with the
approval of the European Commission, the cost associated with
upgrading the grid - which also involves the necessary grid
expansion - will have to be borne by the grid operator. For the sake
of transparency, the grid operators will be obliged to present
detailed calculations of the investments required because these
expenses can be included by grid operators when calculating their
service charges.
Paragraph 3
A clearing centre, which will be attached to the Federal Ministry
of Economics and Technology, will be established for the settlement
of disputes. The parties concerned include in particular the
associations of grid operators and of operators of electricity
generating installations as defined in Section 2 of this Act.
Section 11
Section 11 must be seen in close connection with Section 3. The
provisions laid down in both sections, taken together, constitute a
multi-level equalising system for electricity purchases and
compensation payments.
Level 1, which is dealt with in Section 3(1), provides for the
connection of an electricity generating installation to the next
closest suitable grid. This grid will usually be a local low-voltage
grid. However, if the installation to be connected is a large wind
farm, the grid may also be a higher voltage grid, or even a
transmission grid. The operator of the grid concerned will be
obliged to purchase, and pay compensation for, the electricity
delivered.
Level 2, which is dealt with in Section 3(2), provides for the
purchase of, and compensation payments to be made for, electricity
by the upstream transmission grid operator. If the grid to which an
installation is connected is already a transmission grid, there will
be no upstream transmission grid. In that case, level 2 will not
apply.
Level 3, which is dealt with in Section 11 (1) to (3), provides
for fair nation-wide equalisation among transmission grid operators
in terms of electricity volumes purchased and compensation payments
made. This provision is designed to remedy a shortcoming in the
former Electricity Feed Act, as a result of which the electricity
purchases to be made under the Electricity Feed Act in some regions
were far above average. The equalisation provision in the present
Act is aimed at the operators of transmission grids because this is
a small group with a limited number of players which will easily be
able to handle the transactions associated with the equalisation
scheme and which will also be able to monitor each other. After the
implementation of the equalisation procedure, each transmission grid
operator will carry the same percentage share of electricity (fed in
under this Act), relative to the total amount of electricity
transmitted via the grid of the operator concerned.
Level 4, which is dealt with in Section 11(4), provides for
another step to be taken. Pursuant to the provisions in this
paragraph, transmission grid operators will evenly distribute the
electricity purchased under this Act among electricity distributors
operating within their sales territory, and the latter will be
obliged to pay the same compensation rates for this electricity
nation-wide. The result of this provision is that each utility
company which supplies electricity will have to purchase the same
percentage share of electricity and pay the same percentage share of
the compensation due. Level 4 ideally complements the principle of
deglomeration for utility companies insofar as that it imposes a
similar obligation on electricity distributors which are responsible
for energy production methods that jeopardise the climate and the
environment.
The obligation to purchase, and pay compensation for, electricity
as specified in Section 11(4) will not apply to utility companies if
over half of the electricity they deliver is generated from
renewables because - again in accordance with the 'polluter pays'
principle - such companies have already done enough to protect the
environment and manage global warming.
Electricity purchased at the compensation rates specified in
Sections 4 to 8 must not be marketed as electricity from renewable
energy sources at prices which are below the average compensation
rates. In other words, when electricity which was fed into the grid
under the provisions of this Act is marketed, the compensation rates
paid will be regarded as the electricity generation costs to which
other cost items (e.g. grid operating charges, licence fees, ecotax
and value-added tax) have to be added in order to obtain the market
price. The purpose of this provision is to combat price dumping in
the renewables electricity market. There is a risk of price dumping
because the overwhelming share of the electricity to be purchased
under this Act will be purchased by the large utility companies
which still have a dominant position in the market. The reference
period for calculating the average compensation rate will be the
period two quarters earlier. During the first quarter after the
entry into force of the Renewable Energy Sources Act, the
compensation payments made under the Electricity Feed Act can be
used mutatis mutandis.
The purpose of the provisions in Section 11(5) is to ensure
transparency with regard to electricity purchases and compensation
payments by grid operators which are obliged under this Act to
connect electricity generators to their grids; and to equalise among
transmission grid operators the amounts of electricity purchased and
the compensation payments made.
Section 12
These provisions are designed to monitor the market penetration
achieved and the technological progress made by installations for
the generation of electricity from renewable energy sources and,
where necessary, to adjust the level of the compensation rates.
Adjustments of compensation rates will have to be announced early
enough prior to their introduction. However, such adjustments can
only apply to new installations; otherwise, there would be no
reliable basis for operators of installations to make their
investments, and it would be impossible for credit institutions
involved in financing such installations to estimate the cost of
such investments.
Source: Hans-Josef Fell
http://www.hans-josef-fell.de/ |