Germany Launches Next Phase of Energy Transition

sigmar-gabriel
S. Gabriel, © Bundesrat, Frank Bräuer

On July 8, the Renewable Energy Sources Act 2017 (EEG 2017) was passed by both houses of the German parliament. Its most important addition is that from 2017 on, “rather than being fixed by the government, future rates of renewables funding will be determined by the market by means of dedicated auction schemes,” the economy ministry announced. Whereas the parliamentary opposition and several environmental associations have criticized the EEG 2017, the BMWi described it as the “next phase of the energy transition.” Renewable energy technologies had already reached market maturity and were ready to face the competition. The 2025 target was to increase the renewable share in electricity consumption from today’s 33 percent to 45 percent. Owners of smaller plants (< 750 kW) do not need to take part in the bidding process.

Conversely, several critics of the law have said that the change in rules would stall the deployment of wind power plants just as much as it did on the PV market. Peter Knitsch, state secretary at the environment ministry of North Rhine-Westphalia, said: “The federal government is wrong to stop funding completely. Let me also say that these rules run counter to the aims agreed upon during the COP21 talks in Paris.”

Hydrogenics

On the day that the law was passed, Robert Habeck, energy minister of Schleswig-Holstein, stood before the Bundesrat assembly saying that the measures put in place were “not sufficient,” especially since the opportunity for integrating the renewable power market with the transportation and chemical industry had been missed. German economic minister Sigmar Gabriel, however, replied that the sector integration was the next item on the agenda. He spoke of the “largest reform of the electricity market since the liberalization in the 1990s.”

No final consumer fee

The amendment does not explicitly mention power-to-gas, but it does say something about systems converting power into heat, so that there is a backdoor through which P2G systems could benefit from the amended legislation. To be more precise, one of the suggested remedies for the current shortage in the German grid is the plan to improve the standing of CHP through financial support of up to two gigawatts of added load in a still-to-be-specified area. By helping with the retrofit of existing CHP plants (> 500 kW) through the addition of electric heat sources, such a move is expected two kill two birds with one stone: First, immersion heaters need power and second, CHP plants on-site no longer produce any electrical energy. It will lessen transmission grid loads without creating a gap in heat supply.

Another rule stipulates that other systems, no matter their technological basis, could profit from the change in rules if the 2 GW threshold is not achieved by power-to-heat systems alone. Then power-to-gas systems could be used, although their utilization would still need to be specified by additional regulations. By fall 2016, we shall know whether the envisaged two gigawatts can be provided by these types of systems.

An important aspect is the reimbursement of grid transmission fees, EEG surcharges and other charges and taxes, which have so far been paid by the consumer. Electricity produced by power-based heat suppliers – or possibly by P2G systems – will no longer be at a financial disadvantage. Bernd Pitschak, managing director of Hydrogenics, explained: “In our view, an electrolysis system is not a final consumer, but a facility producing something that is sold and that reaches an end customer eventually. This final consumer could be a hydrogen filling station or a chemical plant.”

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