Austria: Renewable Energy: Amendment Of The Austrian Green Electricity Act Doubles Funding

After four months of negotiations, the Austrian National Council has finally reached an agreement on the amendment of the Green Electricity Act ("Ökostromnovelle"). The required two-thirds majority was reached by a last minute agreement between the coalition parties and the Green Party. The aim of the new legislation is to increase the percentage of green electricity and to achieve an expansion of renewable energy in Austria.

Overview of the major amendments

The cornerstones of the adopted amendment to the Green Electricity Act are as follows:

  • Additional investment subsidies will be available for the construction and amendment of private and small scale photovoltaic systems and energy storage. The envisaged investment subsidies amount to EUR 15 million for 2018 and 2019, and at least EUR 9 million will have to be invested in photovoltaic systems.
  • New biogas plants will still be eligible for benefits from the new supporting regime. However, stricter rules regarding the efficiency and the materials used will apply from 1 January 2018.
  • Additional funding will be available for wind power and small hydropower. The annual volume of support funding for wind power will be EUR 30 million for contracts entered into in 2017, and EUR 15 million for 2018. The annual volume for small hydropower is EUR 2 million for 2017, and EUR 1.5 million for 2018.
  • The expiration period for pending subsidy applications will be increased from three to five years. However, applications older than four years will not receive the more favorable tariff which applies at the time of the application, but rather the last valid tariff.
  • Reimbursement of electricity quantities from green electricity plants is limited to the contractually agreed bottleneck. In the event of an overshoot of the bottleneck (minus a self-supply component), the production quantities resulting from the overrun are remunerated at the market price minus the compensatory expenses.
  • From 2018 onwards, the so-called "remaining-pot" will only contain EUR 12 million instead of EUR 13 million as previously envisaged. This amount will be reduced annually by EUR 1 million until 2022.
  • The state governor will only recognise commodity dependent plants as green energy plants. The Clearing House for Clean Electricity AG (OeMAG) will examine all other plants to ascertain whether they meet the prerequisites to be considered green energy plants. For this purpose, the newly created Section 15a stipulates which technical documents must be attached to applications. Incomplete applications may be rejected, resulting in the respective power plant falling in the ranking system.

This Legal Insight only focusses on changes to the amendment compared to the original government bill. For details on all other changes, please refer to the previous Legal Insight regarding the Green Energy Act from 5 February 2017.

Adoption of Biogas Technology Compensation Act 2017 postponed

The first proposal to amend the Green Electricity Act was published on 1 February 2017. It foresaw inter alia the enactment of the Biogas Technology Compensation Act 2017, which lay down rules for the financial compensation for biogas plants, as well as their withdrawal from the existing subsidies regime. The proposed law essentially aimed to decommission biogas plants which could not be modernised and were thus unprofitable, by providing compensation payments. The now adopted amendment no longer foresees the enactment of the Biogas Technology Compensation Act 2017. It remains to be seen whether such a compensation act will be adopted, and unprofitable biogas plants will receive compensation for decommissioning.

Photovoltaics

One of the main changes of the now adopted amendment compared to the original government bill is the additional investment subsidies for private and small scale photovoltaic systems and energy storage. The construction and the amendment of photovoltaic systems and energy storage on a private building / roof or on business premises may be funded if the system is connected to the public electricity transmission grid, and if no other subsidies (eg feed-in tariff subsidies or other funding) are available. The envisaged investment subsidies amount to EUR 15 million for 2018 and 2019. At least EUR 9 million will have to be invested in photovoltaic systems. The funding amounts to max 30 % of the construction costs (not including costs of land) and may be increased by EUR 500 per kWh in case the storage capacity is increased by at least 0,5 kWh per kWpeak bottleneck output. However, the overall max funding may not exceed 45 % of the additional environment-related costs. Investment subsidies are granted if the application is submitted before the construction / amendment of the photovoltaic systems, or energy storage takes place, and upon submission of proof of investment costs. Once the investment subsidies are confirmed by the competent authority, the photovoltaic systems or energy storage has to be put in operation within one year, otherwise the application is deemed withdrawn and the confirmation expired.

Biogas

As far as biogas plants are concerned the new legislation no longer excludes these plants from the subsidy regime as originally foreseen in the government bill. New biogas plants will still receive subsidies. However, stricter rules will apply after 1 January 2018. The OeMAG is only obliged to contract with biogas plants under fixed feed-in tariffs, if the following requirements are met: The feed-in is operated by remote control; the content of maize and corn in the fuel does not exceed 30 %; the plants reach a maximum electric power of 150 kW and a fuel efficiency of over 67,5 % or the biogas production plants process the produced biogas to the quality of natural gas and feed it in the public gas transmission grid, and the distance between the generation plant and the biogas production plant is at least 5 km. From 1 January 2018 onwards, OeMAG's obligation to contract under fixed feed-in tariffs only applies to new plants based on solid and liquid biomass, if the feed-in is operated by remote control.

In addition to continuing the subsidy regime for biogas plants, the new amendment stipulates that existing biogas plants, which are highly efficient, will receive a successor tariff from OeMAG. Compared to the original government bill, the new amendment more than doubles the annual volume of support funding for biogas plants and increases the amount to EUR 11.7 million until 31 December 2021. Moreover, in case the annual volume is not used, it can be transferred to the next year, and if the volume does not suffice, the volumes from the following years can be used in advance. In case it is needed, an amount of up to EUR 23.4 million could be used for one year; however, the amount exceeding EUR 11.7 million would have to be deducted from the following years accordingly. Plants that use fuels consisting of more than 60 % corn and maize are excluded from this support regime. Special requirements for the application such as the disclosure of fuel efficiency are also determined in the amendment.

Wind power and photovoltaic systems are the winners

The green electricity package is not only pushing forward the expansion of renewable energies in Austria, but it also creates a better framework for plant operators and reduces bureaucracy.

Clear winners of the amendment to the Green Electricity Act are wind power plants and photovoltaic systems (including energy storage). Wind power can benefit from the extension of the expiry period for pending subsidy applications and additional subsidies amounting to EUR 30 million in 2017 and EUR 15 million in 2018. Private and small scale photovoltaic systems and energy storage will profit from the amendment by receiving an extra EUR 15 million in investment subsidies for the construction and amendment to existing systems.

The adopted amendment also contains some benefits for small hydropower plants and biogas plants. The annual subsidies for small hydropower plants increase from EUR 1.5 million to EUR 2.5 million. Compared to the first proposed amendment, the newly adopted amendment to the Green Electricity Act does not remove biogas plants from the existing subsidy regime, and certain plant operators will receive a successor tariff. In addition, newly constructed biogas plants will still be eligible for subsidies.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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