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A better basis for planning the energy transition
The Federal Cabinet has approved two essential pieces of draft legislation that are to give energy companies a reliable basis for planning: one of them sets out the respective financial responsibilities for the decommissioning and dismantling of nuclear power plants and for the disposal of radioactive waste. In other words, it deals with the costs of the nuclear phase-out. The second piece of draft legislation will change the provisions on combined-heat-and-power (CHP) and on self-supply as defined by the Renewable Energy Sources Act (EEG). This revision was made in response to an agreement struck with the European Commission at the end of August. The objective here is to ensure that all legislation pertaining to the energy transition is in line with state-aid rules. The European Commission approved of the changes on 25 October.
Federal Minister for Economic Affairs and Energy Sigmar Gabriel said: “Both pieces of draft legislation are highly important in that they give the relevant players a reliable basis to plan on. We are ensuring, first, that the financing for decommissioning, dismantling and disposal is guaranteed over the long term, without costs being one-sidedly shifted to society or jeopardising operators’ economic viability. Second, just a few weeks after reaching an understanding about combined-heat-and-power and the rules on self-supply with the European Commission, we are now transposing this agreement into national law.”
But what exactly will change under the new legislation?
Operators and German government to share responsibility
The draft legislation for an Act reorganising responsibility for nuclear waste management (in German only) sets out how the exactly nuclear phase-out is to be financed and how responsibility is to be shared between the operators and the German government. More specifically, operators will continue to be responsible for decommissioning and dismantling the nuclear power plants and for ensuring that all of the radioactive waste produced is correctly packaged. The German government will take over the responsibility for interim and final storage, the funding for which is to be provided by the operators. These pay into a new fund, which will be worth a total of €23.5 billion.
In approving this draft legislation, the Federal Cabinet has followed the recommendations unilaterally approved and published by the Commission tasked with reviewing the financing for the phase-out of nuclear energy in April 2016. The new law is to enter into force on 31 December 2016.
CHP auctions and a grandfather clause for self-suppliers
The second piece of draft legislation (in German only) is also key to providing a reliable regulatory framework for operators of small and large-scale energy installations, including private households using micro-installations for self-supply. The following changes will apply:
- CHP auctions: In future, funding for CHP installations with a capacity of between 1 and 50 megawatts will be subject to successful participation in an auction. The first auctions are to be held in the winter of 2017/2018 and to be partially opened up to installations situated elsewhere in Europe, albeit only to a small degree. This will increase competition and make the CHP funding more cost-efficient. A new Ordinance governing a pilot auction for CHP installations will be issued in 2017.
- Surcharge under the Combined Heat and Power Act: For reasons related to both European state-aid rules and to efforts undertaken to safeguard the competitiveness of electricity-intensive companies, the provisions governing the so-called Special Equalisation Scheme in the Renewable Energy Sources Act will be incorporated into the Combined Heat and Power Act (for more information about the Special Equalisation Scheme, please click here).
- Self-supply and the Renewable Energy Sources Act: The current provision, under which existing installations used for operator’s own supply are exempted from the renewables surcharge, was given only temporary approval by the European Commission. This approval will expire at the end of 2017. Under the new provision, electricity generated by existing installations and used to cover operators’ own demand will continue to be fully exempted from the renewables surcharge. The only exception to this rule is installations undergoing substantial modernisation (e.g. being fitted with a new generator). Electricity generated by these installations and used to cover operators’ own supply will be subject to a maximum of 20 per cent of the renewables surcharge. The rules that apply to new installations will remain unchanged. This means that electricity from conventional new installations and used to cover operators’ own demand will continue to be subject to the renewables surcharge in full, whereas a reduced rate will apply to electricity from renewables installations and highly efficient CHP installations that is used to cover operators’ own demand.
The Act amending the provisions on electricity generation from CHP and on electricity used to cover operators’ own demand is to enter into force on 1 January 2017.