Wind energy has been a success story in Germany up to now. In 2018, Germany's wind power generation, both onshore and offshore, totaled nearly 60,000 MW, accounting for more than 20 percent of German electricity production. As discussed in a recent Jones Day Talks podcast, both operators of and investors in wind farms should be aware, however, of a recent amendment to the German Renewables Energies Act ("EEG"), which will increase costs of operations for many wind farms in Germany.
On December 21, 2018, the seventh amendment to the EEG was enacted. The most relevant change to come out of this amendment is the new obligation to equip wind turbines with need-controlled nighttime identification. Prior to this amendment, wind turbines in Germany with a height of 100 meters or more were required to be marked by flashing signals at night for aviation security reasons. However, the amendment requires that after July 1, 2020, plant operators will be obligated to install need-controlled nighttime identification to ensure that the signals only start flashing at night when an aircraft actually approaches. This obligation applies to both new and existing installations and therefore will require that existing wind farms be retrofitted. Moreover, it applies not only to onshore wind farms, but also to certain offshore farms, namely those in the territorial sea, in zone one of the exclusive economic zone of the North Sea and those in the exclusive economic zone of the Baltic Sea.
This obligation is not to be taken lightly. First, the penalty for noncompliance is costly. During any period of noncompliance, the feed-in tariff will be reduced to the monthly market value for the period that the operator of the wind farm remains in violation, meaning that the operator will lose the right to receive the so-called "market premium" for the power generated during any period of noncompliance. Next, this new requirement affects a majority of the wind turbines currently in operation in Germany. Indeed, according to estimates, it will affect approximately 18,000 wind turbines in Germany. Put another way, 60 percent of the approximately 30,000 wind turbines currently operating in Germany will need to be retrofitted to comply with this obligation.
The costs of retrofitting will depend on which technology is used. Until now, only rather expensive radar systems were legally permitted, at a cost of around 100,000€ per turbine. The amended EEG expressly provides, however, that equipment for the use of transponder signals from aircraft can also be used. This solution is considerably more cost effective, as according to the explanatory memorandum to the law, the costs for these receivers are approximately 30,000€ for an entire wind farm. Unfortunately, this transponder technology is not yet approved and although the general administrative regulation for the marking of aviation obstacles is likely to be adapted soon, wind farm operators who want to use the transponder technology for retrofitting should keep a close eye on developments with respect to the approval of such technology.
It is also important to note that permits must be obtained to retrofit a nighttime identification system. The device must be approved by German Air Traffic Control for nighttime identification. Prior to use on a turbine at a specific location, the approval of the responsible aviation authority is also required. In addition, from an emission control law perspective, the installation will often be an ancillary installation to the wind turbine which requires, prior to installation, a notification of change in accordance with Section 15 of the Federal Emission Control Act. Of course, the determination of which permits will be required ultimately depends on the concrete technical solution in the individual case.
Given the rather ambitious timeframe for the implementation of this retrofitting obligation, an extension option has been incorporated into the law, pursuant to which the Federal Network Agency can extend the implementation period if the necessary technical equipment is not available in the market in sufficient quantities. The Federal Network Agency may, upon application, also allow exceptions in individual cases, in particular for smaller wind farms, if the fulfilment of the obligation is economically unreasonable. This is a discretionary decision of the Federal Network Agency for individual cases and the criteria under which such exemptions may be granted are not yet clear.
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.