Distribution system relating to incentive; Source: BMWi/Holger Vonderlind

© BMWi/Holger Vonderlind

The Federal Cabinet has adopted several key energy policies presented by the Federal Minister for Economic Affairs and Energy: the Cross-Border Renewable Energy Ordinance, the Incentive Regulation Ordinance and the declaration by the Federal Government on the implementation of the recommendations by the Commission to Review the Financing for the Phase-out of Nuclear Energy.

Minister Gabriel said: "We have just adopted three key policies for the energy transition. We are opening up the auctions of funding for renewable energy to other EU Member States. This makes it clear that the energy transition is a pan-European project. Also, the Incentive Regulation Ordinance will provide important signals for investment in the distribution grids. These need to be upgraded to cope with growing shares of renewable energy. And, finally, we are ensuring that the financing of the nuclear phase-out is in place. We have therefore approved the implementation of the recommendations of the Commission to Review the Financing for the Phase-out of Nuclear Energy."

The Cross-Border Renewable Energy Ordinance, implements the provisions of the 2014 Renewable Energy Sources Act and permits a more integrated European approach to the energy transition. From 2017, the auctioning of funding for 5% of new renewables capacity to be installed each year will be opened up to installations in other European Member States on a basis of reciprocity. In a first step, the ordinance will cover pilot auctions for ground-mounted PV installations. From 2017, parts of the auctions for other technologies will also be opened up to other EU Member States. Initial pilot projects are planned for 2016.

The Federal Government's draft Incentive Regulation Ordinance thoroughly modernises the framework for investment by distribution system operators. Rising shares of renewable energy are creating a need for further upgrading of the distribution system in the coming years. At the same time, the costs for the energy consumers need to be kept as low as possible. To achieve this, it is to be possible to include rising capital costs from investments in the grid costs without any delay. Particularly efficient grid operators will be rewarded with a financial bonus. In return, the annual adjustment will mean that energy consumers will benefit more quickly from lower capital costs. The Incentive Regulation Ordinance has now been forwarded to the Bundesrat, as its approval is needed.

Also, the cabinet adopted a declaration by the Federal Government on the implementation of the recommendations by the Commission to Review the Financing for the Phase-out of Nuclear Energy of 27 April 2016. The Federal Government intends to implement the Review Commission's recommendations and thereby secure the financing of the nuclear phase-out. The Federal Government is preparing legislation to achieve this. The intention is to establish a public-law fund. The initiative is also to embrace the aspect of continuing liability of hived-off parts of companies in relation to the fund. The date from which this extended liability is to apply is the date of this cabinet decision. This means that any corporate restructuring after this date will be covered by the envisaged rules. It is no longer possible for companies to assume that the current legal situation will remain in place.