Reforming Renewables A Very Unpopular Energy Reform

The newly reformed Renewable Energy Sources Act came into effect a year ago, but so far there is little praise for the measure.
Even on windy days, the market for renewable energy can stand still.

Pierre-Pascal Urbon’s assessment is harsh: “The amendment was an absolute catastrophe for the German solar industry and cost many jobs,” complained the chief executive of SMA, a Kassel-based producer of solar inverters.

He is referring to the reformed Renewable Energies Act, known under its German abbreviation EEG, which came into effect just over a year ago, on August 1, 2014, after months of political debate.

Sigmar Gabriel, Germany’s minister for economic affairs and energy, wanted to better steer the expansion of renewable energies with the amended law.

In the aftermath of the Fukushima nuclear disaster in 2011, Germany turned its back on nuclear power and embarked on an ambitious energy transition away from fossil fuels. As part of this transition, the government set a target for renewables to provide 60 percent of energy needs by 2050.

In the reformed law, Mr. Gabriel abolished the set remuneration for green electricity production and defined expansion corridors, essentially the growth targets for the renewables sector. By doing so, he wanted to protect companies and households from higher electricity bills. A year on, there are very few who have much positive to say about these changes.

One of the biggest turning points in the new law is that, starting in 2017, there will be absolutely no set remuneration paid for renewable energies anymore.

Things look especially bleak for the solar industry. Hardly any new solar power plants have been built since the law was reformed. Things have not been much better for the wind sector. In the first six months of this year more than one third fewer wind turbines have been built on land than in the first half of 2014. Hermann Albers, president of the German Wind Energy Association, called the new expansion corridors “absurd.”

Nevertheless, the wind energy industry has not been affected quite as badly by the measure. In the years before the reform the construction of wind turbines had not yet reached the new limits set by Mr. Gabriel.

Still, the price of electricity has slightly dropped for both private households and industrial customers. Primarily, the costs of the EEG levies are lower today. The energy-intensive companies also came away from the 2014 reform well. In 2015 even more companies had the right, due to their high electricity costs, to pay a lower EEG levy than in 2014.

Many companies, however, remain dissatisfied. In fact, 69 percent of family-owned businesses give the federal government a grade of a “D” or worse for its energy policies. That is according to a recent survey of 521 members of the association of family-owned businesses, which was made available exclusively to Handelsblatt.

The companies are particularly bothered by the new rule, whereby their own electricity use is no longer completely exempted from the EEG levy. After all, the poll also shows that more and more family-owned companies are supplying their own electricity. While in 2013 only 17 percent did so, in 2015 almost one third did. For these companies having their own power supply is the “only remaining possibility of absorbing the disadvantages of international competition,” said Karl Tack, head of the association’s commission on energy policies.

The issue of self-supply of power is also something that makes Heiko von Tschischwitz see red. The chief executive of green energy company LichtBlick complains that renters who get their power from a shared installation on their own roof still have to pay the full levy, unlike the property owners. He is calling for the equal treatment of both groups. “The EEG levy on the private consumption of self-produced renewable energy must be abolished,” said Julia Verlinden, the spokeswoman on energy policies for the Greens’ parliamentary group.

Falling Prices, Stagnating Investment-01

Things only look good for businesses that build wind turbines in the high seas — that sector is booming, with high rates of new installations. Although an expansion corridor was set in the new EEG, it was measured generously. In an interview with Handelsblatt, Andreas Nauen, chairman of the board of management of the Hamburg-based wind turbine manufacturer Senvion, praised above all the “reasonable dialogue” with politicians. Planning predictability has improved in recent years, he said. That is vital for the industry’s billion-euro projects.

One of the biggest turning points in the new EEG is that, starting in 2017, there will be absolutely no set remuneration paid for renewable energies anymore. Instead, the plant operators will have to take part in tender calls. Hildegard Müller, board chairwoman of the German Association of Energy and Water Industries, praised the change. “It is and remains a good thing that in the future there will no longer be feed-in remunerations that are set for decades,” she told Handelsblatt.

Ms. Verlinden of the Green party is more critical of the new model. “Calls for tenders will make the expansion of renewables more expensive,” she warned.

Before the parliament’s summer break, Mr. Gabriel’s junior minister, Rainer Baake, made public his “white paper” on the “Electricity Market 2.0,” and the measures described in them are expected to be molded into laws later this year.

Video: The history of the renewable energy sources act.

Dana Heide is a correspondent for Handelsblatt in Berlin, focusing on energy policies and small and medium-sized companies. To contact the author: [email protected]