Investment bank, Jeffries has outlined key changes expected in a new Renewable Energy Legislation (EEG) draft set to be discussed by the German Government at a cabinet meeting to be held on June 6th. Amendments to the German EEG were not due to be debated by Parliament until September, according to the research note but go in hand with the cabinet meeting on proposed legislative changes that could see the phasing out of nuclear power.
According to Jeffries there will be a strong move towards renewable energy sources and a move away from nuclear by 2020. Indeed, Jeffries believes that there is a genuine cross-party consensus on a nuclear free Germany by 2020, due in part to the significant recent victory by the Greens in elections in Bremen over the ruling party of Chancellor Merkel.
With a new Draft of Renewables Energies Act being written, Jeffries believes it has an insight into some of the key proposals, which include the following;
• A goal of Germany going 40% renewable by 2020 and 80% by 2050
• Increased feed-in tariffs for offshore wind (from €13 ct/kWh to €15 ct/kWh) as well as the option to receive a higher tariff (€19ct/KWh), but for a shorter time period. The state development bank (KfW) will provide up to €5bn in debt financing to kick off the debt market;
• Maintain the existing degression system for PV solar as well as providing incentives for the self consumption of the power produced;
• A so-called optional “market premium” will be introduced which will incentivise the renewable generator to produce power with the view of supplying the market with energy when and if needed;
• Incentives will be put in place for energy storage facilities as well as technologies such as biogas which can be used to store energy.
Jeffries also noted that only 4 out of 17 nuclear power stations were in operation in Germany over the weekend, sparking fears of potential blackouts that didn’t materialise. Jeffries take on this was that solar energy generation actually delivered over 10GW of power at peak times, while peak power prices only hit a high of €70/kWh, which is similar to France, which is highly dependent on nuclear energy.