German Parliament passes the reformed Renewable Energy Law

On Friday, 8th June 2016, the German Parliament passed the reformed Renewable Energy Law (EEG). This step ends a long period of intense discussions, providing uncertainty at the German market.

The reformed law is going to introduce tenders in Germany. From 2017 onwards an annual volume of 2800 MW for onshore wind will be auctioned. Although, in 2014 and 2015 volumes have been higher, the 2.800 MW p.a. provide for an up-side compared to the average volume of 2.300 MW p.a. in the years 2010 to 2014.

Awards fix the remuneration of a project for 20 years. Bids will be at a 100-percent-site and the maximum bid allowed is 7 €ct/kWh. Adjustments for lower or higher wind speed sites will be undertaken by adjustment factors, through which the site-specific remuneration is determined. The adjustment factors come together with a new reference-yield-model that better reflects wind conditions, providing a competitive environment for low and high wind speed sites.

For projects that have a building permit by end of 2016 and which opt to be remunerated under the old Feed-in-Tariff-System, the degression was increased. However, instead of on-time-degression, which would have had an all-at-once effect, parliament agreed on stretching this degression into monthly steps, easing effects for the industry.

“The reform is a further step towards integrating wind power into the energy market. Stronger market integration is a path we are well aware of and it reflects that wind power is a mainstream energy source,” says Tony Adam, Manager Public Affairs, “In general, the tendering-model for onshore wind seems to be well done and appears to allow for a further promotion of wind power throughout Germany. Some points that entered the law seem not to follow a fully stringent approach for the so-called energy transition.”

Questionable are the so-called grid restriction areas that will be defined, for instance. In these areas merely 58 percent of the average installations of the last three years will be allowed to be installed. The ratio of supporters of this regulation is to match grid extension with installations of renewables.  Nevertheless, this regulation can impact site availability.

The Group has installed wind power capacity of more than 18 GW in over 25 markets. In 2015, Nordex and Acciona Windpower recorded combined sales of EUR 3.4 billion. The Company currently has over 4,800 employees. The production network comprises plants in Germany, Spain, Brazil, the United States and soon also India. The product range primarily concentrates on onshore turbines in the 1.5 – 3MW class addressing the requirements of developed as well as emerging markets.