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July 8 — The German Parliament July 8 backed a measure to slow the growth of renewable energy, with lawmakers voting to replace generous subsidies for wind and solar with electricity prices set competitively at auction.
Both houses of the German Parliament, the Bundestag and the Bundesrat, adopted the bill—EEG 2016—to amend the German Renewable Energy Sources Act and discontinue the current subsidy model of feed-in tariffs for green electricity, which dates back to 2000, and guarantees an above-market price to renewable energy producers for a specific period. That price is passed on to consumers in the form of a surcharge.
Bloomberg News reported: “As clean power surged to about a third of generation last year, the fees climbed to about 23 billion euros ($25.5 billion), helping make German electricity the second-most expensive in the European Union after Denmark. The government wants auctions to boost competition and speed clean power’s price parity with coal and gas-fired generation.”
Minister of Economics and Energy Sigmar Gabriel, whose ministry introduced the bill, said: “With this, the next phase of the energy transition can begin.”
The German Cabinet approved the bill June 8. If signed into law by the federal president, as expected, substantial parts of the EEG 2016 will go into effect Jan. 1, 2017.
The EEG 2016 forms part of Germany's overall plan, known locally as the Energiewende, to phase out fossil fuels from its energy mix and replace them with renewable energy sources.
The amended law specifies a target of 55 percent to 60 percent of electricity generated by renewables in the energy mix by 2035, and at least 80 percent by 2050. The 2025 target for renewables in the electricity supply remains set at the maximum of 45 percent established under the EEG 2014.
The EEG 2016 also moves Germany away from its current subsidy model for green energy, which uses fixed feed-in tariffs for producers. These will be replaced by competitive auctions that will cover up to 80 percent of electricity generated in new green energy installations.
Smaller on-shore wind turbines and solar plants with an installed capacity of up to 750 kilowatts are exempt from auctions under the EEG 2016, to maintain the diversity of actors producing renewable energy.
“With the reform of the EEG, we are making renewable energy fit for the electricity market,” said Gabriel. “With the shift to competition, we are ensuring that the diversity of actors—a hallmark of the German transition—remains in place.”
But critics said the targets contained in the EEG 2016 effectively slow Germany's transition to green energy, and warned that the proposed system of auctions will favor big energy producers at the expense of smaller players.
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