This chapter will provide a detailed overview of the regulatory development and situation for onshore and offshore wind en-ergy.
6.1.1 ONSHORE
The first regulations for wind energy feed in tariffs (FITs) in Germany were enacted in the “Stromeinspeisungsgesetz” (Act on the Sale of Electricity to the Grid) which came into effect in 1991. In 2000 the law was replaced by the “Erneuerbare Ener-gien Gesetz (EEG)” (Renewable Energy Act). Since then, the EEG is the primary support scheme for renewable energy in Germany. The latest amendment (EEG 2014) came into effect on the 1st of August 2014. The general outline of the law is de-scribed below. Important aspects of the current and the pre-ceding versions relevant for the observed period (2007 to 2012) will be described as well (EEG 2004, EEG 2009 and EEG 2012).
The EEG regulates the support of all types of renewable energy including onshore and offshore wind. Onshore wind terms are described in the following.
The EEG defines two different Feed-In Tariffs, a basic tariff and a higher initial tariff. Each wind energy project supported by the EEG receives the higher initial tariff for at least 5 years.
The duration of the claim for the initial tariff can be extended up to 20 years, depending on the quality of the wind site. This claim duration is calculated for each installed wind turbine af-ter five years of operation dependent on its received energy yield in that time based on the “reference yield model”.
For every wind turbine type a specific reference yield is de-fined. The reference yield is the energy production of a turbine type on a reference site with an average annual wind speed of 5.5 m/s at a height of 30 m above ground, a logarithmic wind profile, a roughness length of 0.1 m and a Rayleigh distribu-tion. The quality of the reference site is defined to be 100 %.
The energy yield of an actual wind turbine is compared to the reference yield of that turbine type and hence the quality of the actual wind site can be calculated (in percent of the
refer-ence site quality). Turbines with a very high site quality re-ceive no more than five years of the initial tariff and 15 years of the basic tariff. Turbines with lower site quality get an ex-tension of the claim duration for the initial tariff up to 20 years. Most of the turbines installed in Germany, especially those in the inland are eligible for close to 20 years of the high initial tariff since very good wind sites are rare.
EEG 2004
The EEG 2004 replaced the original version of the law (EEG 2000) and came into effect on the 1st of August 2004.The gen-eral baseline of the law did not change. The basic tariff in the EEG 2004 was lowered to€ 55 /MWh and the initial tariff was set at €87/MWh. Both tariffs decreased with an annual de-gression rate of 2 %. This means, a turbine installed in 2005 receives a 2 % higher tariff than a turbine installed in 2006.
For repowering projects the duration of the initial tariff was prolonged by an additional extension factor (depending on the site quality) as an incentive to replace old turbines.
EEG 2009
The EEG 2009 replaced the EEG 2004 and came into effect on the 1st of January 2009. The basic tariff in the EEG 2009 was 50.2 €/MWh and the initial tariff was set at 92 €/MWh. Both tariffs decreased with an annual degression rate of 1 %. Addi-tional to the feed-in tariff a wind energy project can receive different bonuses if it fulfils specific requirements. The EEG 2004 repowering incentive was displaced by a repowering bonus system. The repowering bonus amounting to 5 €/MWh in 2009 was paid if the new turbine is replacing an old turbine at the turbine location or nearby (neighbouring commune or administrative district). The ancillary services bonus (5 €/MWh in 2009) was paid if the turbines had the capability to deliver system services like low voltage ride though capa-bilities to the grid. For turbines installed in July 2010 or later the fulfilment of the ancillary service requirements are man-datory, but still those receive a bonus for doing that. Both bo-nuses are paid for the initial FIT duration (5 to 20 years).
EEG 2012
The EEG 2012 came into effect on the 1st of January 2012. The
as long as the initial FIT. One important change which comes in place with the EEG 2012 is the introduction of the market premium scheme: Wind turbine operators can voluntarily par-ticipate in that scheme and use direct marketing instead of selling the energy to the TSO. When using direct marketing the operator does not get the usual feed-in tariff anymore but gets paid the difference between the feed-in tariff (plus bonuses applying for the specific turbine) and the average energy mar-ket price as a feed-in premium. Furthermore, an incentive is set via an additional bonus the plant operator gets in that sys-tem: the management bonus which should balance the addi-tional marketing costs and which amounts to 12 €/MWh in 2012 and was reduced to 6.5-7.5 €/MWh in 2013.
EEG 2014
The EEG 2014, which came into effect on the 1st of August 2014, included several major changes. Direct marketing be-came mandatory, bonus payments were abolished and a sys-tematic change to a tendering model as required by the Guide-lines on State aid for environmental protection and energy 2014-2020 by the European Commission (EC 2014) is being enacted to be introduced by 2017.
The shift to direct marketing means that plant operators do not receive a fixed FIT anymore. Instead they receive the dif-ference between the average wind energy market price and the FIT as a premium on top of the price they received for their energy on the whole sale market (the difference is calcu-lated individually for each turbine).
The new basic tariff in the EEG 2014 is 49.5 €/MWh and the initial tariff is set at 89 €/MWh in 2014. The degression rate is flexible and depends on the annual net wind energy capacity addition. If more capacity than the annual target of 2,500 MW (+- 100 MW) was added during a year before the regression date (1st January, 1st April, 1st July and 1st October every Year starting on 1st of January 2016) the regression will increase. In case of very low capacity additions (less than 1,800 MW) the regression rate turns negative and therefore lead to increasing tariffs. This results in a span of the degression rate for every quarter of -0.4 % to 1.2 %.
The Repowering-Bonus and Ancillary Services-Bonus have been cancelled in the EEG 2014. The next amendment of the Renewable Energy Act is expected by end of 2016, since ac-cording to the EEG 2014 a tendering model for wind energy
(among other renewable energies) is going to be implemented by 2017.
6.1.2 OFFSHORE
For offshore wind energy the law on the energy industry (EnWG) and the renewable energy act (EEG) are most rele-vant. The EnWG covers the grid connection and the EEG the remuneration and related topics.
EnWG 2006 – 2012
The connection of generators to the grid is covered in § 17 of the law on the energy industry (EnWG). Since the amendment of the law in 2006 also the connection of offshore wind tur-bines was included. The TSO was responsible for the grid con-nection and the concon-nection had to be ready when the offshore wind farm was operational. The design of the connection was not further described in the law at that time. Therefore a reali-sation via a radial and a hub connection was possible.
The second amendment in 2011 the hub connection was set as a standard for the grid connection of offshore wind farms. The offshore wind turbines which would be suitable for the hub connection were identified by the federal network agency (BNetzA), the federal maritime and hydrographic agency (BSH), the federal agency for nature conservation and the coastal states and stated in the offshore grid plan.
But this initial grid connection approach was missing detailed and binding regulations regarding the implementation of the grid connection. As a consequence the completion of the off-shore wind farms and the corresponding grid connection did not match which lead to a loss of revenues on the OWF opera-tors’ side.
EnWG 2012 – 2014
With the aim to address these problems the EnWG was amended in the end of 2012 and a system shift was conducted.
The more holistic approach of the new regulations is seen in the increase of paragraphs regarding offshore grid connection from two to ten.
velopment plan should include a time wise differentiation of all measures necessary for the improvement, enhancement and development of the offshore grid connection. In addition the offshore grid development plan includes information re-garding planned completion dates and binding dates for the start of the construction of grid connections.
The TSOs need to construct and operate the grid connection lines according to the O-NEP.
In 2014 there was a further adaptation of the Energy Act, which entered into force on 01.08.2014. In the area of the grid connection of OWF a limitation of assignable capacity until 31.12.2020 was introduced. Up to this point, assignable con-nection capacity, taking into account all existing unconditional grid connection commitments, is, according to §17d (3) of the Energy Act, 6.5 GW. [Energy Act 2014]
However, the BnetzA together with the BSH is allowed to, con-sidering all unconditional grid connection commitments; as-sign connection capacity of up to 7.7 GW before the 1.1.2018 (Section 118 (4) of the Energy Act 2014). This approach takes the possibility into account that not all OWFs, which are as-signed to grid connection capacity, are realized. The aim of the increased allocation of grid connection capacity is to ensure that by the year 2020 actually OWFs with a capacity of 6.5 GW are implemented, as required by the current political objec-tive. [EEG 2014] From 2020 on, 800 MW per year may be as-signed as grid connection capacity. [Energy Act 2014]
The Federal Network Agency sets the criteria for non-discriminatory allocation of grid connection capacity. Accord-ing to a decision of the BNetzA from 08.13.2014 the followAccord-ing points must be met in order to be admitted to the so-called ca-pacity allocation process:
The applicant must be able to demonstrate an executable ap-proval. In addition, soil investigation at all offshore wind tur-bine locations must have been carried out and a binding decla-ration by the applicant regarding the requested connection capacity needs to be available.
The Federal Network Agency will decide on the allocation of the grid connection capacity. If there is insufficient capacity for the requested connection capacity by the authorized appli-cant, the BNetzA conducts an auction for the corresponding connection cable. [Federal Network Agency, 2014a]
On the basis of § 17 d paragraph 3 and 4, the BNetzA has opened the first allocation method for grid connection capaci-ty in September 2014, and used the abilicapaci-ty to assign 7.7 GW capacity. Therefore, taking into account all unconditional grid connection commitments, 1,722.7 MW of connection capacity were available in the last capacity allocation procedure. [FNA 2014B]
As a result of the first allocation process 1061.6 MW were al-located without auction. However, there was a bottleneck in one cluster as the demanded capacity (450 MW OWF EnBW Hohe See and 316 MW OWF Albatros) was significantly higher than the available capacity of 450 MW. This bottleneck was supposed to be solved by the auction of connection capacity between the respective applicants. [FNA 2014B]
The need for the auction resulted from the abolition of the network connection BorWin4 that was included in the O-NEP 2013. In the short term the bottleneck problem was solved by the acquisition of the OWF Albatros by EnBW and the com-mitment of the BnetzaA to provide additional grid connection capacity in the short term. [iwr.de 2015]
EEG 2000
Offshore wind energy was also included in the first EEG in 2000. The remuneration was granted for 20 years and split in-to a higher initial remuneration and a basic remuneration. The initial remuneration was 9.1 cent/kWh and the basic remuner-ation was 6.19 cent/kWh. The initial remunerremuner-ation was at least paid for the first nine years. Due to a location specific remuneration which assured that locations with low wind speeds receive the higher initial remuneration longer than lo-cations with good wind speeds the same formula as explained above for onshore wind energy was applied to calculate the time of the higher initial remuneration and the basic remuner-ation.
EEG 2004
After the introduction of the first EEG in the year 2000 the first amendment took place in 2004. The amendment also in-troduced new remuneration values and calculation methods regarding the time of the initial and basic remuneration for
and installed in at least 20 m water depth, was now calculated according to distance to shore and water depth. For every sm that the turbine location exceeds the 12 sm zone the initial remuneration is extended by 0.5 month. For every meter water depth in the location of the offshore turbine the initial remu-neration period is extended by 1.7 month for every meter wa-ter depth which exceeds 20 m. The basic remuneration was 6.19 cent/kWh.
EEG 2009
The EEG 2009 dedicated a whole paragraph (§31) to the re-muneration regulations for offshore wind energy. The initial remuneration was 15 cent/kWh for turbines which came into operation before 01.01.2016 and at least granted for 12 years.
The formula to calculate an extension of the initial tion stayed the same as in the EEG 2004. The basic remunera-tion was reduced to 3.5 cent/kWh. The total time frame for remuneration payments stayed at 20 years.
EEG 2012
In the EEG 2012 the targets of the energy sector development were for the first time mentioned in the EEG 2012. These were a share of 35% of the electricity consumption produced by re-newable energy until 2020. This share should increase to 50%
in 2030, 65% in 2040 and at least 80% in 2050. Another im-portant pillar was the market-, system- and grid integration of renewable energies. This was supported by an optional premi-um for wind farm operators who sell their electricity directly at to the market and comply with the respective requirements (e.g. setting production schedules).
Regarding offshore wind energy remuneration the basic remu-neration stayed at 3.5 cent/kWh and the initial remuremu-neration at 15.0 cent/kWh for at least the first 12 years. The calculation of the extension of the initial remuneration stayed the same.
The total support period remained at 20 years. Newly intro-duced was the so called compression model. Offshore turbines which start their operation before 01.01.2018 can also use this model, which means that for the first eight years 19.0 cent/kWh are paid. This period is extended according to the same formula as mentioned above, but for the extended period only 15.0 cent/kWh are paid.
EEG 2014
The EEG 2014 is the act valid and in place at the moment. It includes a compulsory sale of the produced energy to the
mar-ket. The basic remuneration is 3.9 cent/kWh. The initial remu-neration for the first 12 years is at least 15.4 cent/kWh and the formula regarding the extension of the initial remunera-tion period stayed the same. The compression model is also still in place for offshore turbines which start their operation before 01.01.2020 and is valid for the first eight years with a remuneration of 19.4 cent/kWh. After the first year the same formula for the extension period is used as explained above.
But the remuneration for the extension period will be 15.4 cent/kWh. The total remuneration period is 20 years.