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The amendment of the Renewable Energy Sources Act 2021 – Photovoltaic

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​published on 19th February 2021


Photovoltaics is one of the most important technologies of the Energiewende. It stands for unprecedented low-cost electricity generation. The possibilities for application have become increasingly diverse in recent years with floating and agro-PV systems. Nevertheless, most of the expansion is still taking place on rooftops. The amendment of the Renewable Energy Sources Act (EEG) now represents another shake-up in the photovoltaic subsidy landscape. We set out the legal and economic implications in the following article.


All good things are worth waiting for?

It now seems to have become almost standard practice to delay urgent legislative decisions until the last moment. It began with the removal of the PV cap in June 2020, which had been criticized from the beginning. At the end of the year, the amendment to the EEG was passed shortly before Christmas, again with a very critical timetable, in order to enable it to come into force at the turn of the year. This was the only way to avert a looming disaster just before the end of the year, especially with regard to post-EEG plants. Despite the law being passed, important points have been postponed until 2021: e.g. reform of the EEG levy, adjustment of the expansion path, reduction of bureaucratic hurdles, regulation of compensation in the event of negative electricity market prices.


In retrospect, this process unfortunately does not necessarily suggest that planning security for the RE sector was and is the focus. This is also evidenced by the fact that many good suggestions for improvement from the industry associations were not taken into account.

In addition to the political implications, the concrete changes are of course also interesting and therefore you will find the most important new regulations of the EEG 2021 regarding photovoltaics below.

The impact of the amendment of the EEG on the topics of wind and tenant electricity & biomass can be found in separate articles.
 

 

Photovoltaics - legal and economic effects of the new regulations

Increase of the de minimis limit

A important step for all those who are active in the field of rooftop installations is the exemption of PV systems up to 30 kWp for 30 MWh from the EEG levy. This also applies to existing RE systems. This is expected to give a further boost to the already powerful rooftop installations segment. Plants that previously would have been limited to 10 kWp despite available roof space will now be built larger. Likewise, small and medium-sized commercial enterprises that have so far shied away from the expense will follow the economic incentive and build a PV system optimized for their own electricity (§61b para. 2 EEG 2021).

 

4-Hour-Rule

Among other things, the rule for the reduction of the value to be applied in the event of negative electricity market prices was tightened for all systems from 500 kWp (reduction from 6 h to 4 h consecutive hours). As a compensation, the time (not the amount of energy) in which this rule takes effect is added as an extension to the 2-year subsidy period. Due to the difficult-to-predict electricity market situation over the 20-year operating period, this position is associated with a non-negligible risk (§ 3 No. 42a and 43a EEG 2021, § 51 para.1 EEG 2021, § 51a para. 1 EEG 2021).

 

Area coverage and tender volumes

The area coverage of legally supported plants and tender plants has been increased from 110 m to 200 m along highways and railroads. Now, however, a corridor at least 15 m wide must be left free. Thus, a widening of about 75 m takes place here. Since the definition of the edge of the roadway has been changed, there is still a need for clarification here regarding the exact definition of the corridor (Section 37 (1) No. 2 c) EEG 2021, Section 48 (1) Sentence 1 No. 3 c) aa) EEG 2021).


The tender volumes per year for ground-mounted systems were increased slightly. In 2021, 1,850 MWp will be tendered, while the annual volumes in subsequent years will vary from 1,600 MWp (2022), 1,650 MWp (2023-2025) to 1,550 MWp (2026-2028). The volumes for rooftop systems were set at 300 MWp (2021-2022) to 400 MWp (from 2025) annually (§ 4 No. 3 EEG 2021, § 28a para. 1 f.).

 

 

 


Tenders

The division of the tenders into a segment for ground-mounted systems (1st segment) and for roof-mounted systems (2nd segment) (Section 3 No. 4a and 4b EEG 2021) is to be seen as positive. This takes into account the different cost structure of roof systems. However, the bidding volumes of 300 MWp - 400 MWp are so low that - especially with the new regulation for rooftop systems larger than 300 kWp - no positive effect in new construction is to be expected (see below). Since the maximum bid size for both segments was raised from 10 MWp to 20 MWp (Section 37 (3) EEG 2021, Section 38c (2) EEG 2021), larger plants are likely to benefit with slightly decreasing bid values. In particular, however, the segment of medium-sized commercial rooftop installations, which has seen strong growth and potential in recent years, is likely to suffer from the new regulation. Likewise for both segments, the conditions of the bidding procedure have been concretized or changed, whereby in particular the security payment for plants of the 2nd segment of 70 € / kWp is to be mentioned here (§ 38d EEG 2021; 50 € / kWp for plants of the 1st segment) . Especially for smaller project developers this regulation can become a challenge and should be included in the liquidity planning.


For plants of the 1st segment (open space), the maximum value will be determined in the future by the average value of the highest still awarded bids of the last three bid dates increased by 8% (§ 37b EEG 2021). Thus, a dampened adjustment of the maximum value is still achieved in both directions depending on the bid values. If this regulation had been applied last year, it would not have changed the result. However, strong market price increases can lead to the short- to medium-term limitation of the bid level.
 

 

Rooftop systems between 300 kWp and 750 kWp

The system segment of rooftop PV systems between 300 kWp and 750 kWp will now only be granted the market premium for 50% of the electricity generated (Section 48 (5) EEG 2021). As compensation for this, there is the option to participate in the tenders for rooftop systems.

To classify the orders of magnitude: In the last two years, rooftop plants in this plant size of about 1,450 MWp as well as plants larger than 750 kWp with a capacity of 470 MWp were added. All plants that do not have enough self-consumption or cannot realize it due to the strict self-consumption regulations have to share the tender quantities (300 MWp - 400 MWp per year). Due to this, a strong decrease is expected in the rooftop segment larger than 300 kWp. To the same extent, properties with a potential for self-supply of electricity will remain very attractive. A correct delimitation of third party quantities or clever combination of supply or marketing models will become more and more important and has to be considered in the conception from the beginning. The plants will continue to be attractive if they receive a surcharge or a sufficient share of their own electricity. 

 

   (Source: BNetzA, EEG-Zubauwerte (Nov/2020))

 

Agro-PV and Floating PV

Another change - which could have been a major one - is the inclusion of Agro-PV and Floating PV  plants in their own category of "special plants" in the innovation tenders (§ 39n EEG 2021, §§ 15 - 18 InnAusV). The exact requirements for agro-PV and floating-PV plants still have to be defined by the Federal Network Agency by 1.10.2021. Currently, exclusively for the special plants, only a one-time tender of 50 MWp is planned in April 2022, i.e. half a year after the definition of the framework conditions. Unless a more far-reaching adjustment is made, the special plants will then compete directly with "standard" PV plants, which does not promise much success for agro and floating PV due to the higher specific costs. In addition, only so-called "plant combinations" are considered in the innovation tenders, i.e. a combination of different technologies or a storage system. Considering the benefits from area efficiency, the tight timeline for defining the legal framework and especially the tender volume, which is tantamount to non-compliance, is very incomprehensible.


We see opportunities for the implementation of floating and agro-PV plants in the context of innovation tenders in the medium term at locations with a very favorable grid connection situation, where part of the costs can be borne by the other technology.

 

PPA (Power Purchase Agreements)

Sometimes the omission of regulations is more telling than their formulation. This is also the case with PPAs. Even though market integration is demanded from many sides and would represent a real further development of the EEG, little has happened on this point except that some points implicitly or explicitly concern PPAs in the resolution passed as part of the EEG amendment. Regulations that could fundamentally change the situation, such as an electricity price hedge analogous to the Spanish model, are not to be expected. Everything else, such as the much-discussed reduction of bureaucracy, will remain speculation until it becomes concrete.

 

 

Find out which marketing models work in Germany.

 

 

 

 

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​​​*Rödl GmbH Rechtsanwaltsgesellschaft Steuerberatungsgesellschaft Wirtschaftsprüfungsgesellschaft

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