Germany: Changes To The German Renewable Energy Regime From August 2014

Last Updated: 28 August 2014
Article by Ralf Thaeter and Silke Goldberg

1. Introduction

The act for the Reform of the Renewable Energy Act (the "Reform Act") was approved by the German Bundestag on the 27 June 2014 and on 11 July by the German Upper House. It is now set to come into force on 1 August 2014.

Sigmar Gabriel, German minister of Economy and Energy, stressed that the reform would provide a reliable but ambitious expansion path for renewable energy. Whereas previous German governments emphasized the increase of renewable energy generation capacity, the Reform Act has four main objectives:

  1. Continuing and controlling the expansion of renewable energy
  2. Lowering the cost of funding
  3. Spreading the financial burden more fairly
  4. Improving the market integration of renewable energy

The main objective of the Reform Act is to reconcile cost effectiveness, environmental compatibility and security of supply, three concerns that have often been referred to as the "energy trilemma".

In spite of the emphasis on cost control, the German government is keen to point out that the long-term objective of generating 80% of electricity through renewable resources has not changed. The expansion of renewable energy in Germany is set to continue, albeit at a slower pace.

2. Continuing and controlling the expansion of renewable energy

The Reform Act stipulates specific targets as to the portion that energy generated from renewable sources should make up in the future:

  • until 2025, this portion should total 40 - 45 per cent; and
  • until 2035, this portion should total 55 - 60 per cent.

Additionally, the Reform Act sets targets for annual expansion of specific technologies:

  • Installed capacity for solar power should increase by 2,500 MW annually.
  • Installed capacity for on-shore wind farm should be 2,500 MW

In order to regulate the expansion of onshore wind capacity, the EEG now contains an expansion target of net 2,400- 2,600 MW/year for onshore wind power plants for the first time.

  • The annual increase for biomass has been set at no more than 100MW
  • Off-shore wind capacity has a target of 6,500 MW by 2020 and of 15,000 MW by 2030.

3. Lowering the costs

The objective of the Reform Act is to reduce the financial burden of the support programme for renewable energy generation. In order to achieve this objective, the Reform Act will reduce the support levels – with the introduction of technology specific tariffs which will apply to all new plant commissioned after 1 August 2014, further details and technology specific differences are set out below.

Onshore wind

The Reform Act introduces a number of changes for onshore wind; one of the consequences that has been predicted is a "race to commissioning" in 2014 to receive assistance from the old support regime which is likely to be followed by a somewhat slower year in 2015.

From 1 August, the tariff for newly commissioned onshore wind will decrease every quarter by 0.4 per cent (compared to the immediately preceding quarter) subject to the overall expansion of installed onshore wind capacity remaining within the target corridor of 2,400 – 2,600MW/year. Should this target corridor be exceeded, the rate of decrease will be accelerated accordingly. On the other hand, should the lower end of the target corridor (the "Onshore Target Floor") not be reached, the tariff will be adjusted accordingly.

If the target is exceeded by

  • up to 200MW, the reduction will be 0.5 per cent;
  • more than 200 MW, the reduction will be 0.6 per cent;
  • more than 400 MW the reduction will be 0.8 per cent;
  • more than 600 MW the reduction will be 1.0 per cent; and
  • more than 800 MW the reduction will be 1.2 per cent

If the Target Floor is not reached in the relevant period the monthly reduction of the applicable value is decreased. For a shortfall of the Target Floor by up to 200 MW, the reduction is decreased by 0.3 per cent; for a shortfall of the Target Floor by more than 200 MW, the reduction is decreased by 0.2 per cent; and if the Target Floor is not reached by more than 400 MW, the tariff will not be reduced.

The central problem in this approach however is that the actual tariff for each quarter will only be known, at the earliest, five months prior to its entry into force and is calculated on the basis of the reaching or otherwise of the Onshore Target Floor in the period from the last calendar day of the 18th month prior and the first calendar day of the fifth month prior to the relevant quarter. This introduces a level of uncertainty into any project's financial plans which in turn are not within the control of the project itself but determined by the speed with which its competing projects are commissioned. This scenario could lead to some interesting market dynamics in the future but will likely increase the difficulty of financing onshore wind projects.

In another significant change to the previous onshore wind regime, the Reform Act introduces changes to the reference yield model ("Referenzertragsmodell" in German). In this model, the tariff for onshore wind sets out a higher tariff for an initial period of time and a lower rate for the remainder of the 20 years (plus year of commissioning) in which the support tariff applies.

Offshore wind

The Reform Act also introduces a number of changes to the offshore regime.

The Reform Act introduces, by means of an amendment to the German Energy Industry Act (Energiewirtschaftsgesetz), a new mechanism for the allocation of grid connection capacity for new capacity of up to 6,500MW up to 31 December 2020. From 1 January 2021 onwards, the grid connection available for allocation capacity will increase by 800 MW/year.

In the case of demand beyond these capacity targets, the relevant additional grid connection capacity will be allocated in an auction. Should a wind project fail to use its allocated grid capacity, the competent authority, the German Federal Maritime and Hydrographic Office may, subject to certain conditions, revoke allocated grid connection capacity.

It is possible that this new mechanism will make the already difficult process of offshore grid connection more complicated for projects. Further, it remains to be seen whether this process will help to alleviate the pressure on the two offshore TSOs to provide timely grid connections.

However, the structure of the current tariff regime remains largely unchanged and the availability of the popular acceleration model pursuant to which an increased tariff applies for the first eight years has been extended to plants commissioned prior to 1 January 2020.

There are two different approaches of remuneration for offshore wind farms which commence operation before 1 January 2020. Wind farm operators can choose between:

  1. claiming the 'initial remuneration' of 15.4 ct/kWh over a period of 12 years; or
  2. claiming an 'initial remuneration' of 19.4 ct/kWh for a total of 8 years (the so-called optional acceleration model).

After 12 or 8 years, as applicable, the remuneration returns to a fixed level of 3.9 ct/kWh.

Under certain circumstances, the initial remuneration of 15.4 ct/kWh can be extended beyond the period of 12 years, depending on the distance between the wind farm and the coast and the water depth at the location. The period in which the increased initial remuneration of 15.4 ct/kWh is paid is extended by 0.5 months for every full nautical mile of distance between the system and the coast over twelve nautical miles and by 1.7 months for each full metre of water depth exceeding a depth of 20 metres.

The possibility of extension also applies to wind farms for which the operator has selected the higher rate of remuneration of 19.4 ct/kWh for a period of 8 years in accordance with the acceleration model.

Regardless of whether or not the operator has chosen the acceleration model, if the remuneration period is extended, 15.4ct/kWh will be paid out during the extension period.

Overview of applicable FiTs for offshore wind farms pursuant to the Reform Act

Solar (photovoltaic)

The Reform Act does not introduce structural changes to the support regime for solar (photovoltaic) installations; it specifies an expansion corridor of newly built capacity of 2,400-2,600 MW/year (the "Solar Target Corridor"). The slightly changed tariff structure for solar plants will be applicable to plants commissioned from 1 September 2014 onwards.

The applicable value depends on the installed capacity of the plant.

For up to and including 10 MW it is 9.23 Cent/kWh provided that –

  1. the plant is affixed to, in or on a building and the building is predominantly used for purposes other than the generation of electricity from solar power
  2. certain zoning law provisions are complied with.

If the plant is affixed to, in or on exclusively on a building or a noise protection wall, the applicable value is for an installed capacity of –

– up to and including 10kW 13.15 Cent/kWh

– up to and including 40 kW 12.80 Cent/kWh

– up to and including 1 MW 11.49 Cent/kWh

– up to and including 10 MW 9.23 Cent/kWh

Reduction of financial support

From 1 September 2014 the applicable value is reduced monthly by 0.5 per cent relative to the applicable value in the previous month.

The monthly reduction is reviewed and increased or decreased every quarter, depending on whether or not the Solar Target Corridor has been met or exceeded. If the Solar Target Corridor has been exceeded in the relevant period (the period between the last day of the 14th month and the first day of the last month preceding the review) the monthly reduction of the applicable value is increased.

For an excess of -

– up to 900 MW to 1.00 per cent

– more than 900 MW to 1.40 per cent

– more than 1,900 MW to 1.80 per cent

– more than 2,900 MW to 2.20 per cent

– of more than 3,900 MW to 2.50 per cent

– more than 4,900 MW to 2.80 per cent

If the Solar Target Corridor has not been met in the relevant period, the monthly reduction of the applicable value is decreased.

For a shortfall of -

– up to 900 MW to 0.25 per cent

– more than 900 MW to nil

– more than 1,400 MW to nil; the applicable value is increased by 1.50 per cent once on the first day of the applicable quarter

4. Spreading the burden more fairly

In Germany, the cost of the support regime for renewable energy is socialised and largely borne by industrial and domestic consumers through the mechanism of a charge (the "Reallocation Charge") which is added to electricity bills. In the past, large industrial consumers enjoyed an exemption from this reallocation charge. This exemption regime was subject to criticism from the European Commission. One of the objectives of the Reform Act is to spread the burden of the Reallocation Charge more fairly and to revoke or limit any exemptions.


Under the Reform Act, self-supplying entities with an installed capacity of more than 10kW will be subject to the Reallocation Charge.

For self-supply from renewable energy plants commissioned after 1 August 2014 a reduced rate of the Reallocation Charge will be payable. The reduced rate is 30 per cent until the end of 2015, 35 per cent in 2016 and from 2017 onwards 40 per cent of the full amount.

Energy-intensive corporations

Under the applicable regime prior to the Reform Act, energy-intensive corporations were exempt from the Reallocation Charge. Under the Reform Act, exemptions will be limited to corporations and specified sectors characterised by high energy costs, intensity of trade and subject to international competition that depend on the exemption to remain competitive. Eligible sectors are categorised into two lists ("List 1" and "List 2", respectively) which are annexed to the Reform Act.

In order to apply for an exemption a corporation from an eligible sector will need to provide evidence of the following:

  • a certain minimum of energy consumption in the preceding financial year; and
  • that its energy costs make up at least 16 per cent (17 per cent from 2015) of their gross value (for List 1 sectors) or at least 20 per cent of gross value (for List 2 sectors).

Companies benefitting from an exemption are likely to have to pay at least a certain amount of the Reallocation Charge, ie they will have to pay the full Reallocation Charge for the first GWh consumed, and thereafter, for every kWh 15 per cent of the full Reallocation Charge. The amount payable is subject to a cap (or super-cap) of 4 per cent of gross value of the corporation (the "cap") and 0.5 per cent of the gross value of the corporation (the "super cap"). The super cap applies to companies with energy costs of more than 20 per cent of their gross value. Regardless of any applicable cap, the minimum amount payable will be 0.1 cent/kWh or 0.05 cent/kWh for corporations operating in the nonferrous metals sector.

5. Improving the market integration of renewable energy

Compulsory 'direct marketing'

Direct marketing refers to the selling of renewably generated electricity directly to another market participant at market prices rather than to the TSO under the applicable feed-in-tariff.

Under the regime prior to the introduction of the Reform Act, direct selling was used by some large plant operators in peak times to achieve an electricity price above the feed-in-tariff. The Reform Act introduces an element of compulsory direct marketing:

  • for plants with an installed capacity in excess of 500 kW from 1 August 2014; and
  • for smaller plants with an installed capacity of more than 100 kW from 1 January 2016.

Plants with a lower installed capacity remain entitled to a feed-in tariff as well as plants with an installed capacity of up to 250 kW commissioned between 31 December 2015 and 1 January 2017.

For operators subject to the direct marketing regime, the feed-in-tariffs will effectively only be available as an emergency back-up in that such operators will only receive a reduced tariff in case of a switch back to the FIT.

Introduction of tendering

Under the regime prior to the Reform Act, TSOs were subject to a compulsory purchase obligation and as such had to take off, transmit and distribute any renewably generated electricity and pay the producer on the basis of statutory feed-in-tariffs.

The Reform Act introduces, for the first time, the concept of tenders for solar plants on open land by way of a pilot project. If this is successful, the government plans to introduce tendering for all renewable energy sources. The Reform Act does not specify the details of the intended tendering regime – this will be addressed in subsequent secondary legislation.

6. Impact on current and future renewable energy projects

What happens to existing plant?

Offshore wind

The pre-Reform Act tariffs will continue to apply to:

  • plants commissioned before 1 August 2014; and
  • plants with a commissioning date between 1 August 2014 and 31 December 2014 if the developer obtained the licence under the Federal Emission Control Act (Bundesimmissionsschutzgesetz) on or before 22 January 2014.

For all other projects, the support regime of the Reform Act will apply.

Existing biogas plants

In general, the financial support provisions at the time of commissioning are applicable. However, support for subsequent capacity additions is capped at the output achieved in 2013 or 95 per cent of the installed capacity on 31 July 2014, whichever is the higher.

Operators of existing plants are entitled to €130 per kW flexibly provided additional installed capacity per year subject to the additional electricity being made available to the market through direct marketing.

Hydropower plants launched after 1 January 2009

If an existing hydropower plant with an installed capacity of more than 5MW is extended after 1 August 2014, the operator is entitled to financial support under the new rules for 20 years from the date of extension (not including the year of extension).

Where plants with an installed capacity of below 5MW are extended after 1 August 2014 the entitlements remain the same as under the previous rules.

State Aid

The Reform Act, which enters into force on 1 August 2014, will have a yearly budget of ca.€20 billion. The EU Commission has confirmed that the measures set out in the Reform Act are compatible with the EU state aid regime, as the Reform Act supports EU environmental and energy objectives without unduly distorting competition in the European single market.

7. Outlook

It is likely that the Reform Act will spark a '"race towards" commissioning in the offshore wind sector by the end of 2014 in order to benefit from the support regime applicable prior to the Reform Act.

The efforts of the Reform Act to introduce more market based instruments such as compulsory direct marketing and tendering procedures for new facilities which are compatible with European State Aid guidelines reflect a larger trend across the EU.

Weaning companies off from what is perceived as high levels of support with little risk has long been an ambition of many European governments as well as the European Commission as many governments have struggled to maintain the expensive support regimes put in place to achieve a higher share of renewably generated energy.

The fact that the Reform Act has, in contrast to reforms in other EU member states, not cut any tariff retro-actively and, in case of offshore wind, extended the popular acceleration tariff ought to instil confidence in investors.

However, it would seem that the proposed tendering mechanism is the source of some uncertainty which will not be eliminated until the secondary legislation for the tendering procedure is in place and has been tested in practice. Commentators have also criticised the somewhat complicated benchmarking of tariffs on a quarterly basis against technology specific target corridors as these will make it more difficult to reliably predict tariff based income – which may add some difficulty for the financing of some facilities.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions