The German Parliament today adopted the Renewable Energy Act (EEG 2017) which governs the support for electricity from renewable sources. The Act introduces significant changes in the way support levels are determined, introducing separate competitive tenders for onshore wind, offshore wind, solar PV and biomass. A late change to the legislation also introduced ‘technology-neutral’ tenders, in which different renewable technologies would compete against each other. In a study for the German Federation of Energy Traders, Frontier (Europe) had previously emphasised how such ‘technology-neutral’ tenders could generate efficiency gains.
The new law aims to minimise the level of support needed for the German government to meet its target to generate 40 to 45% of power from renewables by 2025. Tender participants will bid for the support level, which determines the ‘marketing premium’ an operator receives in excess of market prices for electricity. Support contracts are awarded to those submitting the lowest bids.
To date, competitive bidding has only been piloted for free-field solar PV. From 2018 to 2020, the German regulator Bundesnetzagentur – responsible for conducting the procurement tender for renewable electricity – will procure 400 MW each year of onshore wind onshore and solar PV in joint tenders for both technologies. ‘Technology-neutral’ tenders might then be adapted from 2021 onwards, depending on an evaluation of these pilot tenders.
Frontier regularly advises public and private sector organisations on issues relating to renewable electricity generation and auction design across Europe.
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