Germany hands destiny of renewables back to big utilities

Renewables International

The Bundestag just voted overwhelmingly in favor of the governing coalition’s proposes to change the country’s renewables policy. The grand coalition of Social Democrats and Christian Democrats got 454 yayss against 123 nays and six abstentions.

We will need to come back to what has just happened over the next few days and weeks anyway, so let’s just start today with the surcharge on direct power consumption.

Over the past month, there has been a lot of back and forth on this policy proposal, and I have spared you the play-by play details. Essentially, the renewables surcharge is to be applied to power consumed directly, i.e. never sold to the grid. The justification has shifted numerous times but is probably related to concern about grid defection; in addition, the government wants to spread the renewables surcharge across more kilowatt-hours.

Apparently, however, the burden is to be spread across investors in renewables, not conventional power plants, which remain exempt from the surcharge. The government apparently wishes to keep coal cheap and make renewables expensive.

The changes are not retroactive, but for systems installed now 30 percent of the surcharge (currently 6.24 cents per kilowatt-hour, so around two cents) will be charged per kilowatt-hour, a figure that rises to 35 percent in twice 16 and 40 percent in 2017, including for systems installed during that timeframe (but not those previously installed).

Tenants who purchase solar power from their landlord’s roof array will have to pay the full surcharge. This move will ensure that the emerging market of solar roofs on rented property will remain stymied. It was about to boom.

There was also a lot of back and forth this month on whether small systems would be exempt. The government has returned to its original idea of having arrays smaller than 10 kilowatts exempt from the surcharge, provided they do not produce more than 10 megawatts-hours per year.

And then there is the issue of whether this law can still be blocked. The answer is technically no; it can only slow down the process. The Bundesrat (the smaller chamber of Parliament representing the rights of Germany’s 16 states) can refuse to ratify the amendments and send them back to the Bundestag for clarification in a negotiation committee between the two parliamentary chambers. If the Bundestag does not wish to make the changes requested, it can go ahead with the law unchanged. The Bundesrat would then need a two-thirds majority to veto the changes out right, but the Bundestag could then override that veto with its own two-thirds majority.

Here, we see why the vote tally above is so important – those 454 votes represent 78 percent of the votes cast – and 73 percent of the 620 total seats in the Bundestag. The CDU and the SPD collectively have more than 67 percent of the seats in the Bundestag, so a two-thirds majority would not be hard to produce.

Renewables will continue to grow, and Germany will meet its targets for green electricity. But the sector has now been handed over to big business. As Hans-Josef Fell – one of the principal co-authors of the original EEG of 2000 – puts it, “The grand coalition has just put an end to the Energiewende as a citizen movement by tearing down the main pillars of the EEG.”

Source: Renewables International. Reproduced with permission.