Habeck: “Further strengthening preparedness by temporarily increasing electricity generation from renewables and via further measures to cut gas consumption”

The Federal Cabinet today approved the wording submitted by the Federal Ministry for Economic Affairs and Climate Action for a draft law amending the Energy Security of Supply Act and other energy-related regulations. The objective of the draft of a third amendment to the Energy Security of Supply Act (EnSiG 3.0) is to temporarily increase the production of electricity using renewables and to raise the transport capacities of the electricity grid, in order to contribute to the reduction of gas consumption during the winters of 2022/2023 and 2023/2024. Further to this, the feed-in of liquified gas will be safeguarded during the winter of 2022/2023.

Federal Minister Robert Habeck said, “Russia’s war of aggression against Ukraine has created uncertainty in energy markets; that is precisely Putin’s intention. We are, however, countering this with consistent precautions and by securing the energy supply. We began preparing for the winter at an early stage and this is manifesting key successes. We have thus been virtually independent of Russian gas imports from Nord Stream 1 since the beginning of September. Despite the interruptions to supply, gas storage facilities are already well stocked and filling is continuing – today they are at around 88.5%. We are pushing ahead with the expansion of liquefied natural gas terminals. The measures adopted today mean we can temporarily increase electricity generation from renewable energy in order to save even more gas. We are enabling the additional feed-in of wind energy and photovoltaics, removing restrictions and providing further incentives for electricity production using biogas. We are picking up the pace on the expansion of the grid in order to temporarily increase the load on networks and thus increase transport capacity. In addition, we are reducing the obstacles to fuel switching. All of these measures are serving to further reduce our gas consumption and consolidate our independence from Russian energy imports. And in doing so, we are strengthening our electricity system.”

The revisions to the Energy Security of Supply Act also open up opportunities for load flexibility on the part of large industrial consumers. In addition, there are procedural simplifications which will improve the use of LNG plants in order to secure the largest possible gas feed-in at the sites in Brunsbüttel, Wilhelmshaven and Lubmin this winter.

The wording for the draft law amending the Energy Security of Supply Act and other energy-related regulations can be found here (in German).

The measures included in EnSiG 3.0 in detail:

1. Temporary increasing of electricity production using photovoltaics:

• A special crisis bidding process for solar installations in the first segment with a volume of 1,500 MW will be introduced for 15 January 2023. This should raise the potential for expansion of solar energy in the short term in order to enable a reduction of gas used to generate electricity. The regulation is subject to confirmation under State aid rules.

• The lifting of the 70% rule for new PV installations with a capacity up to and including 25 kW, which was already set out for 1 January 2023, will be brought forward. Operators of such PV installations were previously obliged to limit their active power feed-in to 70% or to fit them with control equipment. To further increase PV feed-in, the lifting of the regulation will be brought forward for all new installations that were commissioned after 14 September 2022 – the day of the Cabinet meeting on the wording for a draft law amending the Energy Security of Supply Act and other energy-related regulations.

• In addition, the 70% rule will be lifted from 1 January 2023 for existing PV installations with a capacity up to and including 7 kW. For PV installations with an installed capacity of over 7 kW, the transition period already set out in the law will remain the same, according to which the rule expires upon the installation of a smart meter. According to the Metering Point Operation Act, smart meters must be installed for renewable energy systems with an installed capacity of over 7 kW.

• Further to this, clarifications will follow in favour of balcony PV installations, in the event of penalties which had led to uncertainties in some cases.

• The measures to increase the special crisis bidding process for photovoltaics is subject to confirmation under State aid rules.

2. Additional incentives for electricity production using biogas

• A special rule for the funding of biogas plants provided under the Renewable Energy Sources Act will be put in place during 2022 and 2023, where restrictions that might limit the production of biogas will be lifted. This creates a temporary incentive during the crisis for electricity production using biogas to be increased and thus removes the need to use gas to generate the corresponding amount of electricity.

• A temporary flexibilisation of the slurry bonus will be regulated from as soon as the Act enters into force up to 30 April 2023. Operators of biogas facilities will be incentivised during the crisis to produce as much as electricity as possible using biogas. The flexibilisation of the slurry bonus is intended to take away the risk of plant operators losing the bonus.

• Both measures are subject to confirmation under State aid rules.

• In addition to this, the legislation on authorisations is to be simplified. The Federal/State Working Group on Immission Protection’s enforcement guidance document for biogas plants, those existing and designed for flexible energy production, will create the opportunity to temporarily produce more raw biogas without an authorisation. This enforcement guidance document is to be completed in time for the conclusion of the legislative procedure in the German Bundestag. If this cannot be done, wording for an amendment to the Federal Immission Control Act will be introduced to the legislative process.

3. Temporary increase of onshore wind power production:

• Until 15 April 2023, wind energy installation operators can exceed the limits of the Technical Instructions on Noise Abatement (TA Lärm) and the shadow flicker protection. The discontinuation of shutdowns due to noise enables operators to boost the capacity of the installations and thus generate more electricity, especially between 10 p.m. and 6 a.m. The discontinuation of shutdowns due to shadows cast enables operators to generate more electricity in the mornings and evenings.

• Changes to enhance performance (software updates, type change), will be quick and done without red tape by clarifying the scope of the inspection during the process of obtaining amending authorisations.

4. Measures to speed up the grid expansion and the higher level of grid capacity utilisation:

• Measures to speed up the grid expansion: various changes to allow a more flexible approach on the part of the authority, easier approval for early starts to construction.

• Increasing of the transport capacities of existing electricity grids (increased capacity utilisation): temporarily increasing the capacity utilisation of high-voltage grids can be implemented without prior approval for the short term; stipulating a procedure for any interference that occurs.

• Facilitation of the construction and better utilisation of offshore connection lines.

• Demand side flexibility of large industrial consumers: in order to leverage demand side flexibility as quickly as possible, obstacles to participation in balancing energy markets will be reduced, a flexibilisation of electricity consumption will be enabled through changes to individual grid fees.

• Furthermore, a compensation rule will be introduced for the eventuality that the operator of a gas storage facility suffers undue economic hardship as a result of their obligation to maintain the operation of the facility. The maintaining of relevant storage capacity for L gas, as long as the conversion from L to H gas is not yet complete, will also be ensured. This will see the implementation of the Bundestag’s resolutions.

• Measures contained in the Grid Expansion Acceleration Act and the Federal Requirements Plan Act complement those of the Energy Industry Act regarding speeding up the grid expansion and increasing the transport capacities of existing electricity grids. This also takes up proposals made by the Bundesrat.

5. Measures in the LNG Acceleration Act:

• The focus is on procedural simplifications in order to secure the largest possible gas feed-in at the sites in Brunsbüttel, Wilhelmshaven and Lubmin this winter, and also further procedural simplifications and accelerated processes for floating LNG terminals and corresponding pipelines.

6. Additional procedural simplifications for fuel switching:

• The possibility to make temporary derogations or exemptions to the provisions of the Operational Safety Ordinance by means of a statutory instrument for the operation of installations will be extended to the construction and modification of installations.

• At the same time, a provision will be introduced for installations requiring supervision that are constructed or modified due to a serious or substantial gas shortage; these can initially be operated in deviation from the Operational Safety Ordinance. This will have no effect on the obligation to have an approved inspection body audit whether the installation can be operated safely. Three months after this audit at the latest, the permit has to be renewed and applied for with the competent authority.

Further decisions made by the Cabinet to improve the expansion of photovoltaics for homeowners and small businesses:
In addition, the Cabinet today decided on further important improvements for the expansion of photovoltaics for homeowners and small businesses. This will reduce bureaucratic barriers. The Cabinet specifically adopted the draft Annual Tax Act based on a proposal made by the Federal Ministry of Finance. The Annual Tax Act will exempt all PV installations on detached homes and commercial property with a capacity of up to 30 kW, as well as those on blocks of flats with a capacity of up to 15 kW per flat or business unit, but with a maximum capacity of 100 kW per taxpayer, from income tax as of 1 January 2023. Previously, only installations with an output of up to 10 kW have been exempt upon application. The tax exemption eliminates the obligation to ascertain profit and thus to submit the complicated statement of net income, which can often only be completed with the help of a tax advisor. This simplification presents an important incentive to make optimal use of available rooftop space in the future.
Further to this, VAT for the supply and installation of PV installations on residential buildings will be cut to 0%. This will significantly reduce procurement costs. Furthermore, due to the zero tax rates, operators can make use of the VAT regulation for small businesses that has little red tape without drawbacks.