Energiesammelgesetz (EnSaG)

The German Bundestag passed a proposal of its economic committee on November 30, 2018, which was approved by the Bundesrat on December 14, 2018. The EnSaG is an energy-policy-induced legislative project with the purpose to implement key measures regarding the expansion of renewable energy generation and climate protection. Secondly, and more importantly, the EnSaG includes different arrangements to enhance legal and planning security.

Solar Power

The EnSaG lowers the subsidy for large new photovoltaic (PV) rooftop installations. The reduction of the subsidy will take effect progressively on

• 1st February 2019
• 1st March 2019 and
• 1st April 2019.

Reimbursement for energy fed into the grid by new PV rooftop installations with an output of 40 to 750 kilowatt peak (kWp) is reduced to 8,9 Cent per kilowatt hour (kWh), instead of previously about 10 Cent per kWh. Softer rules shall apply for generating projects held by tenants (Mieterstromprojekte), which have so far been subsidized by a special remuneration (Mieterstromzuschlag). Reimbursements for these Mieterstromprojekte will be reduced at slower rates to amend its negative effects on such projects. However, the Mieterstromzuschlag for installations with an output of more than 40 kWp will be reduced to zero in the second half of 2019, effectively ending the Tenants Power Act in terms of plants of this size.

Ground mounted PV installations are subject to tendering rules under the EnSaG. The EnSaG includes special invitations for tendering of PV installations totalling 4 GigaWatt within the next three years (2019 1 GW, 2020 1.4 GW, 2021 1.6 GW). This continues a fundamental shift of reimbursement policies with the abolishment of feed-in tariffs set by the administration. Reimbursement per kWh is instead based on the offers submitted in the process of tendering and subsequently selected by administration.

Mazars view

The Federal Ministry of Economics and Technology (BMWi) justifies the reduction of solar subsidies with the argument of previously over-subsidized structures and EU-specifications mandating the reduction. However, this BMWi-opinion is widely criticized as experts (Hochschule für Technik und Wirtschaft HTW Berlin) question the economic efficiency calculation it is based on. The reduction of subsidies will effectively end larger Mieterstromprojekte by making them economically unfeasible.

Wind Energy

The EnSaG allows special depreciation not just for PV systems but also for onshore wind energy installations. This includes the possibility to make use of special depreciation in the years of 2019 to 2021.

Offshore installations are not supported by similar special contributions. Regarding offshore wind energy plants in the German Baltic Sea, the EnSaG schedules tendering for a total of 1.5 GW in 2019. Connection capacities to previously installed wind energy plants in the North Sea shall also be put to use.

One objective of the EnSaG is to increase acceptance of onshore wind energy installations. To this end, the EnSaG includes nationwide standardization of night time illumination. Wind energy installations are no longer allowed to flash lights perpetually during the night, but only if planes are approaching. The legislator proposes the use of a transponder system as a cost-effective technical solution for this problem. Estimates set the overall costs for such a system at about 30k € for wind energy installations covering a radius of ten kilometers. Operator of wind energy plants can apply for an exception with the German Federal Network Agency (Bundesnetzagentur) if installation costs are unreasonable.

Biofuels

The EnSaG schedules two annual invitations to tender for biomass power plants on 1st April and 1st November, splitting the annual tender volume between these two dates. This should lead to decreased waiting periods.

In addition, liquid manure plants shall no longer be classified by their installed capacity but by their rated power. This change from installed capacity to rated power facilitates both larger biomass power plants and more flexible operations, leading to a more flexible supply of power on the energy market.

“Methanal bonus”: The EnSaG also contains a provision that addresses the problem of the previously unclear legal prerequisites of the methanal bonus (Formaldehydbonus). However, this clarification currently remains under the reservation of approval by the European Commission.

Mazars view

Even though the EnSaG does improve the legal situation for operators of biomass power plants, uncertainties remain.

Cogeneration

The EnSaG entails a stacked reduction of subsidies for existing large cogeneration units with more than 2 MW based on their power-output: The subsidies

• for units with more than 50 MW will be reduced to 1.3 ct/kWh,
• for units with more than 100 MW will be reduced to 0.5 ct/kWh,
• for units with more than 300 MW will be reduced to 0.3 ct/kWh.

Existing cogeneration units with more than 300 MW shall not be entitled to a follow-up funding. These changes concerning existing units will be in effect retroactively to the 1st January 2018.

Mazars view

We welcome that the EnSaG extends the Combined Heat and Power Act (Kraft-Wärme-Kopplungsgesetz) up to 2025. The important step to include cogeneration units that have been modernized in the transitional rule is to be supported. Without this provision, unit operators who have invested high amounts would not benefit from subsidies. This could have resulted in the economic inefficiency of affected units.

Measuring and estimating consumption released from EE apportionments

As a part of the legislative change by the EnSaG, provisions for measuring and estimating consumption of third parties in the EEG have been established by amending § 62a EEG. This is particularly important for exemptions from the EEG apportionments when energy produced is consumed onsite, and for companies with high energy expenses who have declared the power consumption of e.g. service providers or contractors as if they had forwarded the energy to these parties.

Under EnSaG amendments to the EEG, onsite consumption may only be subject to exemptions from EEG apportionments if metering differentiates said onsite consumption from power forwarded to third parties. If metering costs are disproportionately high for small-scale consumers, consumption can be estimated to apply for exemptions.

In addition, a reduction of the EEG levy to 40 percent in the case of self-supply was confirmed retroactively from 1 January 2018 for new plants.

Power and  gas grid

EnSaG amendments to the EnWG also affect the optimization of grid management and a reduction of redispatchment costs. These changes unify the different ways of network operators to merge generation from renewable and cogenerating sources as well as conventional power plants into one consistent provision. Further changes of the EnWG affect the supply line regulation for light gas and producing units. In the EnWG, state aid rules provided by the European Commission are established regarding the tender of capacity reserves.

Overall Mazars View

While the various amendments result in partial small-scale improvements, investment uncertainties remain. The binding establishment of a quote of 65% of renewable energy until 2030 has not become part of the EnSaG. This would have been desirable to increase planning security to the acting parties. Only a fixed and binding framework of timelines and quantities will provide necessary investment insurances to the private sector