Renewable Energy Sources Act (EEG)

Author: Dr. Klaus Hassmann, Cluster Energietechnik (As of: October 2017) Highest attention of all responsible persons is required to lead the energy transition to success. For this purpose, the current state of the expansion of the various renewable energy sources, fluctuating and continuous, must be reflected in the longer-term expansion target 80% renewables in 2050 (intermediate steps: 2025: 40-45, 2035: 55-60%) and the transient between the actual and the target state in regular, not too long, intervals to be reviewed. Expected deviations must be corrected and incentive mechanisms readjusted. This is the purpose of the EEG, which has gone through this iteration process several times until its currently valid version from 2017. Environmental compatibility, economic efficiency and security of supply play an important role. The law is  extensive; to accommodate an overview on 3 pages is worth a try.

Tab 1 shows the development of electricity generation in the last 6 years and, as far as renewables are concerned, their expansion targets until 2035. Source: /1/ BMWI and AG Energiebilanzen.

Germany Gross Electricity Generation, TWh

Renewable, TWh

Renewables' share of gross electricity generation, (%)

1) of which wind accounted for 11.9, biomass 7, PV 5.9, and hydropower 3.2%.

Electricity price household customers

The average electricity price for households with an annual consumption of 3500 kWh has increased from 2011 25.23 to 2016 28.69 cts/kWh; however, in recent years until 2016, the electricity price has remained almost the same. To better classify the cost components from the EEG, it is worth taking a brief look at the elements that add up to the final customer price. These are 4 roughly equal blocks - electricity procurement, network charges, EEG levy and taxes - each of (averaged) around 23%; the remaining 8% is made up of 4 further levies and a concession fee. These numbers were taken from a list of the bdew.

EEG apportionment

The remuneration obligation of into the electrical net fed river from renewable energies lies with the net operator. He incurs costs, he has from the sale of renewable electricity on the electricity exchange but also proceeds; the EEG levy covers the difference.

Tab. 2 shows over time the development of the EEG levy, the average electricity price and the sum of both in cts/kWh (values rounded, source /2/ KfW research No 145 of 6.10. 2016)

EEG levy cts/kWh

Average electricity price on the exchange cts/kWh

Sum EEG-surcharge plus average stock exchange price cts/kWh   

To look at the EEG surcharge and the exchange price for electricity together is one of the ways to infer the future development of the impact of renewables on the  customer end price. Agora Energiewende and the Ökoinstitut have considered some scenarios for this purpose; after a flat maximum in the first years of the next decade, they show a downward trend of this sum value until 2035.

With the EEG 2017, the EEG remuneration for wind and PV is no longer set by the federal government, but determined via tenders. Left to market forces, the federal government expects a significant reduction in costs. This expectation seems to be coming true, as examples from 2017 show: Onshore wind achieved 5.72 cts/kWh in May, 4.28 in August, and ground-mounted PV achieved 6.58 cts/kWh in February and 5.66 in June. The majority of the awards went to citizen energy companies. 

Expansion corridors under the EEG 2017

• Wind Onshore: In 2017, 2018 and 2019, 2,800 MW each and from 2020 2,900 MW per year will be tendered.
• Wind Offshore: By 2030, offshore wind farms with a capacity of 15,000 MW should be installed. In the years 2021 and 2022, an addition of 500 MW and in 2023 to 2025 of 700 MW is planned.
• Photovoltaics: Annual tender of 600 MW.
• Biomass: In 2017, 2018 and 2019, 150 MW each and in 2020, 2021 and 2022, 200 MW per year will be tendered.

Tab 3: Total revenues of plant operators in € billion; (values rounded); sum of photovoltaics, wind on- and offshore, biomass, hydropower, other /3/ Öko-Institut (2015): Die Entwicklung der  EEG-Kosten bis 2035. Study commissioned by Agora Energiewende.

Over time, the above table shows the amount of total revenue received by plant operators for directly marketed electricity as a result of a baseline scenario. For the same time period, the calculations of further scenarios show partly large deviations towards the end of the period under consideration; from 2030 onwards, the annual revenues of plant operators could also be significantly lower compared to Tab 3.

If one breaks down the revenues to the individual renewable technologies, then in the period from 2010 to 2015 the plant operators have earned a total of €87 billion; photovoltaics account for 42% of the revenues, onshore wind power 23%, offshore 5% and biomass 28%.

Conclusion and Outlook

It is difficult to derive medium-term trends for the electricity price from the above figures. It is nevertheless to be ventured: the proceeds of the plant operators will reach their maximum with moderate increases at the beginning of the next decade and decrease thereafter. The EEG surcharge is likely to remain at its current level in the short and medium term. As long as the boundary conditions for the power exchange remain as they are, the price of electricity will not change significantly in the next few years despite the rising share of wind and solar power. 

There are, however, other influences that have a cost- and price-increasing effect. These include, to name a few important cost-driving components of the energy transition:

• The delay in the expansion of the transmission grids; their operators will have to build and operate  new, flexible, fossil-fired, high-efficiency power plants on behalf of the federal government. First tenders are on the way.
• Significant uncertainties are the cost block network expansion itself; the Federal Network Agency has called estimated costs for the extra-high voltage lines; whether this sum is enough to build the lines and put them into operation, we will see. Large projects have now times the characteristic to cost ultimately significantly more than estimated.
• The adaptation of the distribution networks as an important system component will cost money.
• In the power - heat - coupling (CHP)  and in the electricity storage facilities one will have to give gas. In addition, there is the uncertainty of what will happen to the plants that lose their EEG funding at the beginning of the next decade. 

From this, a longer-term outlook is ventured: the electricity for the normal consumer will become more expensive. With a reduction of the considerable tax block, the federal government could counteract.