The German Rewewable Energy Sources Act - a story of success

Development of the EEG

The German Renewable Energy Act (Erneuerbare Energien-Gesetz, EEG) is the most important instrument to support the electricity generation from reewable energies. Since 1991, when the forerunner of the EEG came into force, and especially since 2001, when the German parliament adopted EEG, the renewable energies had an impressive development in germany. In 2011, electricity out of wind, sun, water, biomass and geothermal production had a share of 20 percent in germany - and is continiously growing.

But EEG supported not only the development of renewable energies, the law itself became a worldwide benchmark. A lot of countries, thereunder 19 of the 27 EU-states, chose the German EEG as a role model and adopted similar laws to initiate the local development of renewable energies.

The basic concepts of the Renewable Energy Sources Act

Investment security through guaranteed feed-in tariffs and priority connection to the grid: Every kilowatt-hour produced from renewable energy facilities must be purchased and transported in priority. As a rule, operators of a plant receive a technology-specific guaranteed remuneration for their produced electricity, for 20 years. Particularly small and medium-sized companies can thus gain new access to the electricity market.

Innovation is encouraged: A regular reduction in tariffs (degression) for electricity generation from new facilities puts cost pressure on the manufacturers. That makes renewable energy technologies ever more efficient and affordable.

No burden on the public purse: Renewables still need support. However, the EEG tariffs show clearly what electricity from renewable energy sources actually cost. Unlike the case of fossil fuels, there are no such hidden costs as environmental, climate and health damage. Moreover, support for renewable power is not a subsidy, for it is not paid by tax money. Rather, the additional costs are assigned to the consumers according to the “user-pays” principle: if you use more power, you also pay more for it. Of course, the construction of a safe and clean power supply costs money, but with the EEG, costs are kept as low as possible. The economic benefits of the EEG, such as import avoidance, or damage to the climate or to the environment outweigh these expenditures.

EEG-allocation

For financing the feed-in-tariffs, all electricity users in German have to pay an EEG-allocation. The rate of this allocation is calculated by the difference of the amount of the remuneration and the revenues for selling the electricity by renewable energies. The resulting sum is now allocated to all electricity consumers, relative to their consumption.

The increase of the share of renewable energies caused also an increase og EEG-allocation. In 2011, the customers have to pay 3,5 Cent per kWh for the renewable electricity production. Compared to the total price for electricity or the household expenses, the EEG-allocation only has a small share.

According to the forecasts of the German Government, in the coming years the allocation will stagnate or at the most slightly increase. Latest by the middle of the decade, a continiously decrease of EEG-allocation will begin. So renewable energies will constantly become cheapre, while the price for fossil energies is going to rise.

Costs and Benefits of the Renewable Sources Act

The support of renewable energies not only causes costs, but produces significant benefits. Renewable energies assure climate protection, an independent energy supply an, in the medium term, cheaper electricity prices.

In addition, the renewable-energies-branch evolved to an high-tech industry sector, which guarantees a high number of workplaces an a lot of local added value. In addition, renewable energies produce economic revenues already today.