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New technologies no longer need special protection
Last year, we set a new record: one third of our electricity was generated from the wind, the sun and other renewables - never before had the share of renewables in electricity consumption in Germany been greater. The federal government aims to make it 40 to 45 per cent by 2025. And the figures show that this objective is within reach.
Saying yes to green electricity – but staying on track...
Whilst all the new green capacity is good, the ability to plan is better. We must be able to distribute wind and solar power to final users throughout the country. For this purpose, we need new electricity grids, and their expansion must keep pace with the growing number of new installations. We need both - green electricity and grids to transmit it - and we have to be able to plan the two aspects. In addition, the grids must be suited to cope with growing shares of fluctuating power: the windier and sunnier it is, the more electricity is generated and must be transmitted by the grids.
... and keeping a lid on the costs
The cost of the expansion of renewables must also be limited. The last few years have shown why this is so important: in 2013, we faced the risk of rocketing costs from the expansion of green power. This was due to the fact that since 2000 operators of installations had been granted a fixed funding amount by the state for each kilowatt-hour (kWh) of electricity generated on the basis of wind and sun - guaranteed for 20 years. The aim was to help new technologies to gain ground - "the faster, the better". But the more wind turbines and solar roofs were installed in Germany, the greater was the risk of costs running out of control.
Paving the way for a more market-based system
For this reason, the funding of green electricity was revamped by the 2014 Renewable Energy Sources Act: funding was focused on the cheap energy sources, i.e. solar and wind power, and development corridors were introduced for each type of renewable energy. Furthermore, electricity providers were obliged to market their electricity directly. So the new Act cut costs and helped people to plan. In addition, the 2014 Act laid the foundation for a completely new system, namely competitive auctions for the funding of green electricity. In these auctions, the operators of installations compete for public funding. The lower their calculated costs, i.e. the lower their dependency on funding, the greater is their chance to win the funding in an auction. In other words, the funding goes to those who ask for least. In this way, market forces will keep down the cost of funding green electricity.
Pilot auctions for ground-mounted PV installations - a success story
In 2015, the newly introduced auctions were tested for ground-mounted PV installations - and the results are very promising: all three auction rounds attracted a large number of competitors. Many different players submitted bids, and small bidders and projects also won funding. And that is not all: the third auction round with the lowest prices of all was the round in which most citizens' cooperatives and alliances participated - and some of them even won funding. This is good news for small citizens' cooperatives that are competing for funding with professional operators.
The price level also fell from round to round. This is good news especially for electricity consumers. While the remuneration for electricity generated in ground-mounted PV installations totalled an average 9.41 cents per kilowatt-hour (kWh) in 2014, competition resulted in a decline to 8 cents per kilowatt-hour by the end of 2015.
This is a promising start. What proved to be successful for ground-mounted PV installations is now to be applied to other renewables.
"The new technologies have matured"
Federal Minister for Economic Affairs and Energy Sigmar Gabriel said: "Renewable energies will in the future compete for funding in auctions. The former provisions of the Renewable Energy Sources Act were good at promoting new technologies." The Minister added: "The new technologies have matured. They no longer need special protection. These technologies must now be brought to the market."
The 2016 Renewable Energy Sources Act: a decisive step
The 2016 Renewable Energy Sources Act is based on the experience gained in the auctions for ground-mounted PV installations. It is a decisive step for the next stage of the expansion of renewables: the 2016 Renewable Energy Sources Act treats renewables like mature technologies and creates the preconditions for stabilising costs and at the same time maintaining public acceptance for the energy transition.
According to the planned revision, funding for wind power and other PV installations will also be based on competitive auctions as from 2017. The funding awarded to operators will be just enough to cover the cost-efficient operation of the installations. That is the underlying principle of the auction scheme. "In the future, it is not the Bundestag and the Bundesrat that determine the price of carbon-free green electricity but rather competition for the cheapest solution," Federal Minister Gabriel underlined.
This is to apply to more than 80 per cent of the green electricity generated in new installations. The focus is on onshore wind power and solar energy. But the cost of offshore wind power is also planned to be reduced by introducing auctions. The auction schemes will differ depending on the respective technologies, e.g. offshore wind farms or solar roofs. Auctions will take place on a nation-wide basis to ensure fair competition for planned installations in the whole of Germany.
A share of 40 to 45 per cent: no more and no less
In order to make sure that the electricity grids can keep pace with the expansion of renewables, the existing development corridors for renewable energies will not be changed. 40 to 45 per cent of gross electricity consumption is to be covered by renewables by 2025 - no more and no less, so that the expansion can be planned.
We are working full speed ahead on the new draft Renewable Energy Sources Act. Specific proposals on this aspect and on the draft Act are contained in a 'key issues paper'. The legislation is to complete the parliamentary process by the autumn.