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New auctions about to begin
The transition from the old system of fixed funding rates stipulated by government to new, auction-based systems is coming along well. In mid-May, the Federal Government approved an ordinance that has cleared the way for new auctions. In future, CHP installations with a capacity of between 1 and 50 megawatts and innovative systems will have to face competition. In parallel, the Federal Government has introduced the first auctioning scheme that combines two different technologies, on-shore wind and solar.
CHP auctions – a way to lower costs and integrate renewables
What will change as far as CHP installations are concerned? In future, mid-sized installations with a capacity of between 1 and 50 megawatts will only be eligible for funding if they have successfully taken part in an auctioning scheme held by the Bundesnetzagentur (the federal regulatory authority in charge of the energy market). This is to help bring down the cost of funding. Furthermore, in adopting the ordinance that stipulates these changes, the German government has transposed EU regulations into national law.
Most mid-sized CHP installations feed the heat they generate into the urban heating networks; some are used to supply large commercial or industrial companies. CHP installations generate both electricity and heat. This makes them highly efficient and has helped us reduce our consumption of fuel.
As the government seeks to foster investment in more flexible types of CHP technology, it will now hold the first round of auctions for funding for innovative CHP installations with a capacity of 1 to 10 megawatts. This type of system uses renewable heat energy, e.g. from solar thermal systems or heat pumps, thus preventing a large volume of potential greenhouse gas emissions. Said Rainer Baake, State Secretary in the Federal Ministry for Economic Affairs and Energy: "CHP is an essential building bloc of the energy transition. The next step is to ensure that the installations are flexible enough to respond to fluctuating heat and power generation from renewables.”
Up to 2021, a total annual capacity of 200 MW will be auctioned each year, of which an initial 150 MW is to come from conventional CHP plants and another 50 MW from innovative CHP systems. The share of innovative CHP systems is slowly increasing.
Pilot run: joint auctions for wind and solar power
It has become standard practice for renewables funding to be set by auction. State Secretary Baake explained that, up until now, the German government has had good reason to hold separate auctions for separate technologies, as was stipulated in the Renewable Energy Sources Act. "It's good for energy security and ensures better regional distribution of the electricity generated from renewables. But, nevertheless, we want to launch a pilot project to gain some practical experience with auctions spanning several technologies."
Following a successful pilot phase of auctions for large ground-mounted PV installations, the initial regular rounds of auctions for solar power, and on and offshore wind energy have also been completed. The auctioning schemes have helped bring down the cost of funding for all these technologies. The new pilot project will involve a joint round of auctions for onshore wind power and solar installations with a capacity of more than 750 kilowatts. The purpose of this project is to find out how this type of cross-technology auction ought to be designed and what the results are compared to individual auctioning schemes. Auctions are to be held for 400 megawatts of capacity to be added every year. This volume will be split up into two rounds, with deadlines on 1 April and 1 November respectively. In principle, the rules that will apply for the two technologies will be the same as those for the individual auctions. The joint auctioning scheme will be tested over a period of three years, spanning from 2018 to 2020.