The Renewable Energy Sources Act is a piece of legislation to promote electricity from renewable energy and thus to make our electricity supply more environmentally friendly. The Act is thus helping Germany to achieve its climate targets. The Act entered into force in the year 2000. Since then it has guaranteed fixed funding rates for each kilowatt-hour of clean electricity generated from the sun, the wind, etc. It also makes sure that the grid operators purchase the clean electricity from the producers and give it priority in terms of the electricity fed into the grid. This gave renewables the chance to gain a foothold on the electricity market and to compete with electricity from conventional sources like coal and gas.
The Act has already achieved an important target: since 2015, the biggest share of Germany’s electricity consumption has been covered by electricity from renewables – around 32%, much more than from hard coal, lignite, gas or nuclear power. But the Act can achieve even more: the introduction of the 2017 Renewable Energy Sources Act brings to an end the phase of technology funding in which prices were set by the government. We are moving over to the use of competitive auctions, meaning that the level of the fees paid for electricity generated from renewable energy will be determined by auction. This ensures that future expansion will take place at competitive prices. There will be no more over-funding. The legislation also enables us to ensure that the high level of market-player diversity that has characterised the energy transition will be upheld. The law gives the first-ever statutory definition of a “citizens’ energy company” and provides for these to participate in the auctions on simplified terms. Auctions will be held for funding for onshore and offshore wind energy, PV energy, and biomass. Small installations are exempted from this requirement. These measures will raise the share of renewables in electricity consumption from its current level of approximately 30% in 2016 to at least 35% by the year 2020. At the same time, they will increase cost efficiency.