| 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
www.hans-josef-fell.de
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