The central pillar of the German renewable energy regime is the fixed FiT system combined with a guaranteed right of access to the grid for renewable energy projects. Grid operators must connect renewable energy plants to their grid and remunerate generators for all the energy they feed into the grid according to the fixed FiT system. The FiT system applies for 20 years and for the year of commissioning.
Different levels of FiT apply for different renewable energy types. The highest tariffs are available for solar PV energy, geothermal energy, some types of energy from biomass and offshore wind energy. The costs of grid operators remunerating renewable energy generators on the basis of the FiT system are transferred at various stages of the energy supply chain via a levy system and ultimately the end consumer bears the costs.
In 2011, the government reduced the FiT for onshore wind to €89.3/MWh. In addition, the yearly degression rate (of the FiT applicable to newly commissioned projects) increased from 1 per cent to 1.5 per cent. These moderate changes underline the fact that the onshore wind energy sector is a mature part of the energy industry and requires less start-up support than other renewable energy types such as, for example, geothermal energy, which so far only occupies a niche market in Germany.
The development of offshore wind energy is a cornerstone in the German energy strategy: the wind yield of offshore wind farms is larger than that of onshore wind farms and there is potential to add large amounts of new generation capacity. For offshore wind farms, the EEG offers two tariff systems. The operator can opt either for an initial remuneration of €150/MWh in the first 12 years or for a tariff of €190/MWh for the first eight years of operation (provided that the wind farm comes into operation before 1 January 2018). A continuance of the initial remuneration period (with a remuneration of €150 /MWh for either tariff system) is available depending on the water depth and the distance to shore. After the initial remuneration period the standard feed-in tariff under both tariff systems will be reduced to €35/MWh.
Although Germany is not as well suited geographically for solar PV energy in comparison to some other European countries, the commissioning rate of PV plants has soared to unprecedented levels in recent years. This investment was driven by the combined effect of a relatively high level of EEG FiT and a massive fall in the cost of PV modules. To dampen this surge in PV plant development, the German legislator has introduced a system by which the FiT for new PV projects decreases every month depending on the previously installed capacity. The system is flexible and in years with very little new capacity, the tariff’s degression is lower that in years with high new capacity. This means a yearly reduction of at least 11.4 per cent (basis degression), if the newly introduced extension corridor for additional installation (Zubaukorridor) of between 2,500 to 3,500 MW is complied with. Furthermore, a maximum installation target (Gesamtausbauziel) for PV in Germany amounting to 52 GW has been introduced into the EEG. Once the maximum installation target is reached, new PV plants will not qualify for the feed-in tariff any more. In addition only electricity generated from PV plants with a nominal capacity of 10 MW or less is remunerated under the EEG tariff system, and PV plants with an output of 10 kW to 1,000 kW per year only get paid 90 per cent of the total electricity generated. Currently (January 2013), the maximum remuneration for newly installed PV is €170.2/MWh for rooftop installations and €117.8/MWh for ground mounted plants.
A new development under the German renewable energy support system is the possibility to sell energy directly and outside the FiT structure. If administered well, the revenues from selling directly into the wholesale market may be higher than under the FiT system. The attractiveness of this alternative is evidenced by the fact that currently around 45 per cent of all onshore wind capacity is marketed directly.
The EEG FiT system is available to all renewable energy generation capacity. While the level of EEG FiT can vary, a major limiting factor for the construction of new renewable energy plants is the availability of adequate sites and the different public licensing procedures.
Nearly all plants require some form of public licence, with the type of licence differing depending on the plant type. Depending on peculiarities of state building law in the different federal states, PV plants typically require a building permit from the competent state authorities. For onshore wind farms, the operator typically needs a permit pursuant to the Federal Emission Control Act (Bundesimmissionsschutzgesetz or BImSchG). While the permit procedure under the BImSchG is more complicated than the procedure for obtaining a building permit, the German authorities are well practised in such applications and procedures for issuance. Offshore wind farms, which are usually situated beyond Germany’s coastal waters in the exclusive economic zone, require a permit pursuant to the Maritime Facilities Ordinance from the German Maritime and Federal Hydrographic Agency (Bundesamt für Seeschifffahrt und Hydrographie or BSH). While this procedure is lengthier than the procedure under BImSchG, the BSH is the single authority responsible for granting such permits and as a result it has managed to streamline the procedure considerably in the last few years. Depending on the type and size of a plant, it may be necessary to carry out an ecological impact assessment as part of the applicable licensing procedure.