EEG 2023 – Federal Government Promotes Energy Transition

Industry News – Monday, September 12, 2022

EEG 2023 – federal government promotes energy transition

The German government set itself the targets of generating 80 percent of electricity from renewable sources of energy and reaching a photovoltaic capacity of 215 GW by 2030. Industrial players, researchers and the general public are being called upon to help drive the energy transition forward. But it was over to the government to make the first move recently in the form of a long overdue revision to the Renewable Energy Sources Act (EEG), which creates the legal framework for meeting the ambitious expansion goals.

The 2023 EEG, which came into force on July 30, 2022, will determine some of the main aspects of photovoltaics in Germany from now on, including feed-in tariffs, tender volumes, levies, and sites for solar farms that are eligible for funding. Prior to this amendment, EEG funding had been reallocated to the federal budget. This will relieve the burden on consumers, as the EEG levy is being abolished altogether in the “Easter Package” (the name being given to the energy reform bill).

Intersolar Europe and the German Solar Association (BSW) recently hosted a webinar to provide stakeholders of the solar industry with very specific and comprehensive information on the changes contained in the latest legislation package. With over 1,000 registrations, the webinar met with enormous interest.

Increase to feed-in tariffs for roof-mounted and free-standing installations

With larger tender volumes and higher feed-in tariffs, the foundations are being laid for the extensive expansion of the capacity provided by roof-mounted and free-standing PV installations. It’s expected that these two types of PV systems will account for around half of the expansion portfolio each in the future. According to BSW representative Christian Menke, tender volumes for free-standing installations are gradually being increased to 9,900 MW/year between now and 2025. Starting 2023, installations of up to 1 MW no longer need to participate in tenders in order to receive remuneration for every kilowatt hour fed into the grid for a period of 20 years. There is also a new full feed-in bonus to make this option more attractive again. The increased feed-in tariffs, however, are still subject to approval by the European Commission as part of an aid approval procedure. The option of combining surplus and full feed-in systems belonging to the same building should lead to the simplification of a decentralized energy supply and its profitability. And the process for connecting systems with a capacity of up to 30 kW to the grid has been made even simpler too. In the future, this will be possible within a month of registration without the grid operator having to be present.

Deployment subsidies: opening up suitable land and offering incentives

Tender volumes can only be successfully increased if more land is opened up. In this context, the extension of hard shoulders from 200 meters to 500 meters is a step in the right direction. Another positive development in terms of plant construction is the removal of the ban on projects aimed at self consumption being submitted for tenders. In future, projects with a share of self consumption may also participate in tenders.

Special solar installations in the spotlight

The 2022 revision to the EEG provides funding specifically for the following special solar installations: floating PV, agrivoltaics and parking lot PV. From now on, agrivoltaics falls under the first tender segment (free-standing installations) rather than innovation tenders, which should open up plenty more suitable land. The German Solar Association (BSW) does consider the bonus for agrivoltaics systems to be insufficient, however. It ranges from 1.2 cents/kWh for subsidies in 2023 to 0.5 cents/kWh for subsidies in 2026–2028. It is also expected that the EEG amendment will prevent the full potential of floating PV being exploited because floating systems have to be installed at least 40 meters away from the shore and must not take up more than 15 percent of a body of water. Funding for parking lot PV has also been included in the new legal framework – as has wetland PV (photovoltaic systems installed on rewetted wetlands). There has been little research into this area as it stands, though.

Storage systems increasingly important

Significant progress has been made within the German Energy Industry Act (EnWG) thanks to the full rewrite of the definition of a storage system. Energy storage systems are no longer viewed as “consumers”. Instead, they postpone the final use of electrical energy to a later point in time than its generation. This is mainly of significance as far as grid charges are concerned since they will no longer be applied twice for “double consumption”. This also applies to energy fed back in via charging points. The combination of PV with wind and storage systems will continue to be funded within the scope of innovation tenders.

Deficits due to market conditions

BSW representative Thomas Seltmann sees room for regulatory improvement, for example, in the fixed degression of one percent every six months that will apply from 2024 without market development having any impact whatsoever. He sees a lack of opportunities to quickly implement changes required due to market developments without having to go through tedious aid approval processes. Furthermore, the 2022 EEG neglects a standardized approach to potential unintentional delays to systems being started up as a result of the kinds of supply issues surrounding certain components that are being experienced on the market at the moment.

Call for decentralized PV solutions

Community energy cooperatives will be allowed to install systems with a capacity of up to 6 MW without requiring a tender in the future. When it comes to subsidized tenant power installations, the capacity limit of up to 100 kW has been abolished.

The Easter Package is an important step in making up for the political failures that have slowed down the energy transition in Germany over recent years and sets ambitious targets. Additional political measures should be introduced soon to expand wind and solar energy more quickly, promote climate protection and improve infrastructure and storage systems. As it stands, the first of these measures to expand solar energy has been submitted for discussion between government departments. It would see the introduction of a tax exemption for income from solar installations, with no obligation to declare tax and a reduced rate of VAT on PV components.

You can find more detailed information on the legislation changes in our webinar recording.

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