European Commission approves German renewable energy law EEG 2014

The European Commission has found the new German Renewable Energy Act (EEG 2014) to be in line with EU state aid rules. The EEG 2014 provides support for the production of electricity from renewable energy sources and from mining gas. It also reduces the financial burden on energy-intensive users and certain auto-generators by reducing their level of payment of the EEG-surcharge. Finally, the EEG 2014 provides that the aid will be progressively allocated through tenders which will gradually be opened to operators located in other Member States. The Commission has concluded that the EEG 2014 will further EU environmental and energy objectives without unduly distorting competition in the Single Market.

In April 2014 Germany notified a draft law for supporting renewable energies. The Commission's assessed its compatibility under the provisions of its new Energy and Environmental Aid Guidelines adopted in April 2014. The EEG 2014 will enter into force on 1 August 2014. The yearly budget for the support of renewable electricity is estimated at around €20bn. Producers of renewable electricity will be obliged to sell on the market. They will obtain support in the form of market premiums paid on top of the market price for electricity. Until 31 December 2016 the market premiums will be determined by reference to administratively set reference values. In the case of solar installations on the ground, a pilot tender will be organised. It will determine the level of the premiums and allocation of the aid between participants to the tender. As of 2017, tenders should be generalised but a new law is required to introduce them. The support to renewable electricity is therefore approved until 31 December 2016. Small installations (below 100 kW) will continue to benefit from feed-in tariffs and are not obliged to sell on the market. This part of the scheme was approved for 10 years.