Fact checking the Renewable Energy Sources Act
How many Renewable Energy plants are threatened with a shutdown?
Starting in 2021, up to 6,000 Renewable Energy (RE) plants in the wind energy industry are threatened by the shutdown. The generation capacity of these RE plants amounts to 3,800 – 4,000 MW. In each subsequent year, 2,300 – 2,400 MW of wind energy output would be affected (source: Ebenda) in addition to solar parks and biogas plants.
The power unit of a coal-fired power plant has an average electrical output of 1,000 MW.Source: https://en.wikipedia.org/wiki/Coal-fired_power_station
The gross output of the Isar 2 nuclear power plant is 1,485 MW and it will go offline on December 31, 2022.Source: https://en.wikipedia.org/wiki/Isar_Nuclear_Power_Plant
Is climate reversal at risk from this shutdown of RE plants?
Yes. 2,402 MW of wind power was installed on land in Germany in 2018. If the current trend continues, there will be a reduction in the installed generation capacity of wind power plants in Germany. Resulting in the goals of the federal government not being achievable.
The planned nuclear phase-out, as well as the possible decommissioning or reduction of the output of coal-fired power plants, in combination with the threatened shutdown of RE plants, is also a challenge for the nationwide security of energy supply. In the medium term, the total generation capacity will be reduced, which should actually be covered by RE plants.
What is the EEG?
The German law for the expansion of renewable energies, with the short title: Renewable Energy Sources Act (EEG), regulates the preferred supply of electricity from RE plants into the power grid and guarantees the energy producers a fixed feed-in tariff.
The operators of the public electricity grids in Germany are obliged by the EEG to purchase electricity from RE plants with priority.
Term of the EEG Remuneration
The grid operator pays the energy producer a fixed remuneration for the energy fed in for the term of 20 years, plus the short year of installation.
The electricity customers as end consumers of the generated energy are supplied with electricity by their electricity supplier. For the electricity consumed, the end consumers pay a price to the electricity supplier which, among other things, includes the EEG surcharge.
Where does the EEG surcharge come from?
The electricity supplier buys some of the electricity it supplies to end customers on the electricity exchange. The grid operators sell the electricity they purchase from the RE plants on the electricity exchange.
- The price on the electricity exchange is based on supply and demand. A high supply of electricity reduces the price.
- Regardless of the exchange electricity price, the producers of renewable energy receive a fixed remuneration according to the EEG.
- They receive part of the remuneration, equal to the electricity from the exchange, from the grid operator.
- Producers receive the second part, the amount of the difference between the exchange electricity price and the fixed remuneration, from the EEG surcharge.
The level of the EEG surcharge therefore increases if the electricity price on the electricity exchange drops.
Do all electricity customers pay the EEG surcharge?
Not all electricity customers pay the EEG surcharge for the electricity they consume. Special regulations for electricity-intensive companies partially exempt them from the EEG surcharge. Manufacturing companies that are in international competition and consume more than 1,000,000 kWh per year still pay 10% of the EEG remuneration, while companies with a consumption of over 100 GWh/year only pay 0.05 ct/kWh.
Who pays for the costs of the energy transition?
The costs of the energy transition are covered by citizens as well as small and medium-sized companies. Larger companies benefit from falling prices on the electricity exchange due to the increased use of RE plants.
What happens after the EEG remuneration ends?
After the fixed remuneration for the generated electricity has expired, the RE plants will still be able to produce electricity, feed it into the power grid and sell it on the electricity exchange. The price of electricity for citizens will fall because they will no longer have to pay the EEG surcharge.
Will the RE plants continue to operate after the EEG remuneration?
Only a few RE plants will be able to continue operationg after the EEG remuneration expires. Even if technical operation was still possible, the revenue from the electricity sold on the electricity exchange would not be sufficient to cover the operating costs.
Continued operation out of pure conviction is not possible?
Even if the operators of the RE plants are believers in climate protection and are willing to absorb losses, they would still have to shut down their plants. According to the tax law, an activity without a profit intention is defined as a “hobby”. The activity would thus be assigned to private living. All costs would have to be covered from private assets, which makes it almost impossible to continue operating an RE plant.
Operating Costs of Wind power plants
Electricity Exchange Price
The average market value for wind power from plants on land was 2.77 ct/kWh in 2017.Source: Windenergie Report Germany 2017 – Windmonitor, Fraunhofer IEE, 2018
Are there solutions for continued operation?
Current approaches from the electricity market are electricity sales contracts in which the energy producers sell their electricity directly to an electricity trader. The offers are calculated individually for each power plant and are barely above the electricity exchange price. Electricity traders reserve the right to switch off the generation facilities if their revenue from the sale of electricity falls below a minimum. This makes payments to the plant operator insecure. The power plants are often operated based on the “low budget concept” (source: Deutsche WindGuard GmbH), which means that further operations are discontinued in the event of major deficits.
Alternative solutions from the electricity market have been announced, but often fail due to the legal regulations for the energy industry.
The alternative ExaMesh solution is separate from the energy industry and adheres to the applicable regulations.