EEG amendment 2021: Need for changes to the flexibility surcharge for existing biomass plants

15/05/2021

Since the inception of the EEG 2012, not only the electricity generated from biomass has been subsidised, but also the flexible provision of this electricity and the necessary adaptation of the biomass plants or their mode of operation. Operators of plants that were commissioned before 31 July 2014 can apply for a flexibility premium of EUR 130/kW over 10 years for the part of the output that enables flexible operation. The flexibilisation of plants built at a later date, on the other hand, is subsidised by the flexibility surcharge, which is paid for new plants for up to 20 years. This surcharge will be increased to EUR 65 with the 2021 EEG amendment. Although it is still significantly lower in nominal terms than the flexibility premium, it is paid for the entire installed capacity. For a system that is only half utilised on average due to flexible electricity generation, the flexibility premium therefore corresponds exactly to the flexibility surcharge in relation to the total output.

For existing installations that make use of the option to extend their funding period by a further 10 years, the 2021 amendment to the EEG initially provided for the following new regulation: in order to prevent power already subsidised in the past via the flexibility premium from receiving additional, potentially unlawful (double) support, further flexibility payments (flexibility surcharge) were only to be granted for power ‘that is additionally provided flexibly compared to the use of the flexibility premium’.

One criticism levelled at this new regulation was that it disadvantaged those plant operators who had calculated and submitted their bids to obtain follow-up funding on the basis of extended flexibility payments and whose plant concept was therefore not economically viable without the flexibility surcharge for already installed capacity. It should be noted that this only affects a very small number of installations and that there were no assurances from politicians regarding the extension of flexibility payments under the EEG 2021. More pertinent was the criticism of the lack of clarity and thus legal certainty of the new regulation. Specifically, the wording left open what exactly was meant by the power already provided flexibly. Furthermore, there were calls to take into account the fact that power already subsidised with the flexibility premium would continue to require support – not least because the fulfilment of additional or stricter requirements under the EEG 2021 would result in new costs.

Against this backdrop, a round table under the auspices of the EEG clearing centre and with the participation of the DBFZ drew up recommendations for action in May 2021. The aim was to reduce obstacles to the further flexibilisation of existing biogas plants on the one hand and to avoid over- or double funding on the other. The recommendations of the round table therefore include, firstly, a precise and thus legally secure formulation for calculating the limitation of the flexibility surcharge for already flexibilised plants. Accordingly, all additional output should continue to be eligible for the surcharge with the exception of the share of output ‘which is calculated as the quotient of the total amount of the flexibility premium utilised in euros and 1,300 euros per kilowatt’ – i.e. the share of output already subsidised in the past. Secondly, it is recommended that the system output already subsidised with the flexibility premium should continue to be subsidised in the future at a rate of at least EUR 40/kW. Due to the tendering mechanism anchored in the EEG, a limited risk of overfunding is assumed, as this mechanism incentivises the submission of bids without high profit margins.

Until the revised regulations finally enter into force, the proposed amendments are currently still being reviewed by the EU Commission with regard to their admissibility under state aid law. The text of the Round Table's recommendations is available on the EEG clearing centre website (in German).