by Susanne von Aichberger, Analyst
On Friday, 11 May, 2012, the German Federal Council (representing the German Federal States) sent the latest amendment of the Renewable Energy Act (EEG) for revision to an arbitration panel. The new EEG became effective on April 1, introducing drastic funding restrictions including feed-in tariff cuts of up to 30%, followed by monthly FIT reductions. The law also excluded new systems above 10 MW from EEG funding, and implemented the so-called market integration model that limits the feed-in remuneration to a certain share of produced electricity.
The amendments have led to a wave of insolvencies in the German PV industry. Among the segments that were hit the hardest are developers of very large ground-mounted systems on reclaimed land, in particular as the transition phases set by the law turned out to be too short for many projects. Since these solar parks tend to exceed the 10 MW level, and in most cases are located on former military airports in eastern Germany, the Federal States in the eastern part of the country were among the strongest critics of the amended law.
The Federal Council’s committee for the environment is now demanding a fundamental revision of the law with the aim of avoiding further job losses in the PV industry and rebuilding investment security. The market integration model is among the most disputed points. The committee for economics of the Federal Council has proposed postponing the date which the amended law comes into effect to June 1. The Green Party wants to withdraw the exclusion of new PV plants of above 10 MW from EEG funding.
The arbitration panel consisting of members of the German Federal parliament and the Federal Council will have to work out a compromise, which will then need to go through both chambers again. The rejection of the new law by the Federal Council is seen by many as setback for the minister for the environment, Norbert Röttgen (CDU), who along with the minister for economics, Philipp Rösler (FDP), was main driver behind the amendment.
On May 13, Röttgen lost the election for minister presidency in Germany’s most populated state, North Rhine-Westphalia, leading him to resign as party leader of the state; political observers have now labeled him a “lame duck.” Along with the sweeping election victory of the Green Party in Baden-Württemberg just after the Fukushima events a year ago, Röttgen’s defeat shows that energy issues have established themselves as crucial in major elections in Germany. It also proves that the PV industry campaign for an improvement of the law paid off.
The next sitting of the Federal Council is scheduled for June 15, 2012, which should allow enough time to develop an amended EEG that will limit the damage to the PV industry caused by the hastily done law from April 1.
