The level of subsidies for electricity from renewable energy is to be determined in future via auctions rather than the current system of funding rates prescribed by law. This new approach is laid down in the Renewable Energy Sources Act (the 2014 RES Act and the 2017 RES Act). The aim is a market-based rate of support set by competition. Some of these auctions are also open to providers from other EU Member States. The intention is to anchor the energy transition on a cross-border basis and to gradually align the funding systems.
From 2017, 5% of new renewables capacity to be installed each year will be opened up to installations in other European Member States. To implement this, the Federal Cabinet adopted the on 1 June 2016. The main points of the draft can be downloaded .
Section 2 (6) of the 2014 RES and the corresponding authorisation to issue ordinances specified in section 88 (2-4) of the 2014 RES set out three conditions for funding renewable electricity from other countries:
- Germany and its partner country must conclude an agreement under international law within the meaning of the cooperation mechanisms laid down in the Renewable Energy Directive.
- The cooperation is based on the principle of reciprocity. This means that when Germany opens up its auctions to bidders who plan to build renewables installations abroad, the partner country will also open up its auctions to bidders who plan to build installations in Germany.
- The electricity from installations that have been awarded funding must lead to a tangible impact on the German electricity market ('actual import' of electricity).
Pilot Cooperation with Denmark
On 12 October 2016 the Federal Network Agency launched the pilot cross-border auction for ground-mounted photovoltaic (PV) installations with Denmark. PV installations located both in Germany and in Denmark may submit bids in the context of the first such cross-border auction in Europe. The auction covers a total of 50 megawatts (MW). All installations located in Germany or in Denmark may participate in the auction. Bids for this auction could be submitted to the Federal Network Agency until 23 November 2016.
The auction covers a total of 20 MW. Installations located in Germany can be awarded funding for 2.4 MW. Bids for the Danish auction must be submitted by 8 December 2016.
The auction is based on the and the on the mutual opening up of auctions for ground-mounted photovoltaic installations, which was signed in July 2016. This cooperation agreement is the first of its kind on the basis of the Cross-border Renewable Energy Ordinance.
The aim is to strengthen the regional energy cooperation between Germany and Denmark and establish a framework for the partial opening up of auctions in the field of electricity from renewable energy sources to bids from the partner country. It is important that the countries involved decide themselves on the volumes of capacity available for cross-border auctions for renewable energies. The partner countries must be able to independently control the benefits and the costs of the cooperation. In addition, the cooperation requires that the electricity be physically imported into the other country, and it must be based on the principle of reciprocity.
The auctions are based on the respective national auction designs. As regards site-specific conditions, the rules and conditions of the country where the installation is based will apply. This relates for instance to conditions on the eligible areas and sites and rules on construction and taxes.
Further cross-border auctions are planned for 2017. This is subject to the successful conclusion of the negotiations currently under way with the partner country.