Germany is rapidly gearing up for a major electricity policy revamp, impelled by the ongoing geopolitical circumstances and the need to secure its future national energy supply, besides achieving its climate goals. In early April 2022, the Bundeskabinett or Federal Cabinet approved the “Easter Package” for the electricity sector suggested by the Federal Ministry for Economic Affairs and Climate Action or Bundesministerium für Wirtschaft und Klimaschutz (BMWK). The comprehensive energy package outlines new frameworks for renewables, power grids and markets in order to ensure that the country is on track to achieve climate neutrality in the electricity sector by 2035, with an interim target of 80 per cent (or 600 TWh) renewable electricity by 2030.
The government has presented a package of laws totalling more than 500 pages. It proposes to amend at least five laws: Erneuerbare Energien Gesetz (EEG) or the Renewable Energy Act, Windenergie auf See Gesetz (WindSeeG) or the Offshore Wind Energy Act, Energiewirtschaftsgesetz (EnWG) or the Energy Industry Act, Bundesbedarfsplangesetz (BBPlG) or the Federal Requirement Plan Law and Netzausbaubeschleunigungsgesetz Übertragungsnetz (NABEG) or the Grid Expansion Acceleration Act.
The Easter Package is the country’s largest energy policy amendment in decades. It will comprehensively accelerate the expansion of renewable energies on water, on land and on the roof so that the country’s power supply will be almost entirely based on renewable energy by 2035.
The EEG and WindSeeG Act are proposed to be amended to expand offshore wind energy targets from 20 GW to 30 GW by 2030 and reach at least 40 GW by 2035 and 70 GW by 2045. Further, onshore wind and solar energy must expand at an increasing level of 10 GW per year and 22 GW per year to reach an installed capacity of 115 GW and 215 GW, respectively, by 2030. Adjustments to tender volumes have been proposed to meet new expansion targets. Further, the amendment will accelerate all procedures for offshore wind farms, including early award of network connections.
Key measures proposed to advance the expansion of renewables include the provision of new areas for the expansion of photovoltaics and wind energy, besides enhancing the financial participation of municipalities in renewable expansion. With the proposed abolition of the EEG surcharge for funding renewable energy expansion (to be met via the federal budget instead), regulations for self-consumption and privileging of industry are proposed to be greatly simplified and be a major contribution to reducing bureaucracy in energy law. Through the amendment of EnWG, rights of end customers and supervisory powers of the Federal Network Agency (Bundesnetzagentur or BNetzA) over electricity suppliers will be strengthened.
The expansion of renewable energies and grids will be accelerated by removing obstacles and streamlining planning and approval procedures. The BBPIG will be updated and new projects will be included so that networks can keep pace with renewable energy expansion. Additionally, the German goal of 2045 climate neutrality will be included in the relevant laws (including EnWG), making climate neutrality the overarching aim of grid development.
Particularly, BBPIG is proposed to be amended to include 19 additional power grid expansion projects and modify 17 transmission projects. Notably, all the new transmission projects were found to be necessary as part of the review of the National Development Plan or Netzentwicklungsplans (NEP) 2021-35 approved by BNetzA in January 2022.
To speed up grid expansion, certain administrative steps will be combined and certain adjustments will be made in BBPIG, EnWG and NABEG to ensure that the planning and approval procedures are carried out quickly. Several new and modified grid expansion projects have been marked as transnational and cross-border projects, to which NABEG provisions apply, which provide for federal sectoral planning and a nationwide plan approval procedure to avoid delays in cross-state projects. For these projects, BNetzA carries out the federal sectoral planning. As a result, responsibility for the planning and approval procedures for cross-state and cross-border grid expansion projects is bundled with a single authority. This ensures uniform procedural rules for a project, uniform legal practice and a single point of contact for the project promoter. Additionally, simplifications (including the waiver of federal sectoral planning) will be introduced for new projects to be included in BBPIG, for which there is an option of bundling with a project already anchored in the federal requirements plan. Considerable time saving is proposed to be achieved for network reinforcement measures by dispensing with federal sectoral planning and strengthening the bundling requirement as well as through further digitalisation of procedures.
The new projects would entail an investment of Euro10.8 billion. Assuming all other things to be constant, additional network investment will result in an estimated increase in the annual network charges by an average of around Euro15 for typical household customers and by around Euro200 for typical commercial customers. At the same time, network expansion serves to minimise costs associated with congestion management. The total costs for grid and system security measures (redespatch, feed-in management, countertrading and grid reserve) amounted to around Euro1.4 billion in 2020. Therefore, grid expansion will provide relief to electricity consumers in the medium and long term.
The Easter Package will be forwarded to the German Bundestag or the federal parliament after the cabinet decision and as a next step, go into the parliamentary legislative process.
The German energy package highlights the urgency for addressing the climate crisis as well as the need to exit fossil energies sooner rather than later to become independent of Russia in terms of energy supply as a matter of national security.