EEG 2021 – New German Renewable Energies Act in force from 1 January 2021

The new German Renewable Energies Act 2021 (“EEG 2021”) was finally passed on 18 December 2020 and came into force on 1 January 2021, subject to certain exemptions. The EEG 2021 aims to promote the further expansion of renewable energies and the energy transition in Germany, and achieve greenhouse gas (“GHG”) neutrality by 2050.

Setting ambitious goals

In its ambitious goals towards achieving net zero by 2050, the EEG 2021 refers in particular to:

• GHG neutrality by 2050: Under the EEG 2021, all electricity generated and consumed in Germany is to be GHG neutral before 2050.
• Implementation of the Climate Protection Programme 2030: As an interim goal on the path to net zero by 2050, renewable energies will provide 65% of Germany's electricity consumption in 2030; renewable energy accounted for 42% of electricity consumption in Germany in 2019. The extent to which individual technologies will contribute to achieving the 65% target and the expansion paths (Ausbaupfade) with which this can be achieved are regulated under the EEG 2021.
• Cost development: The EEG 2021 sets out various measures on costs, which include an adjustment of the maximum values in the tenders for onshore wind and photovoltaics (PV).
• Further expansion of renewable energies: Targeted measures to maintain acceptance for the further expansion of renewable energies are proposed, eg wind turbine operators can give local authorities a financial share (€ 2 cents per kilowatt) in the profits from new turbines; such payments can provide incentives for local designation of new areas for wind energy.
• Grid and market integration: Among other things, ’southern quotas’ will be introduced in future tenders. The introduction of these quotas is aimed at relieving the grid bottleneck in central Germany and promoting flexible power generation in southern Germany. The current requirements for the controllability and management of renewable energy plants will also be expanded and the digitalisation strategy via smart meter gateways will continue.
• Entering the ‘post-subsidy era’: The legal framework will be adapted for renewable energy plants for which the 20-year remuneration period expires from 2021.

During the legislative process to the EEG 2021, the legislator issued a resolution requiring the German Federal Government to define a more far-reaching expansion path for renewable energies in the first quarter of 2021, calling for a path that will ensure compatibility with the new European climate target for 2030 and the expected European targets for the expansion of renewables, as well as with Europe’s goal of achieving net zero by 2050.

The resolution issued by the legislator also requires further regulations to be made in the context of accelerated planning and approval of plants, and especially on the repowering of plants.

Initial reactions

Various critics in the political and business arenas have voiced that the reform of the renewable energies law in Germany in the form of the EEG 2021 does not go far enough, with one major aspect being that the electricity demand in Germany for 2030, as set out in the EEG 2021, is considered to be set too low.

The expansion of renewable energies as a ‘public interest’ is also not legally defined under the EEG 2021.

It remains to be seen whether the EEG 2021 and its upcoming amendments will be sufficient in paving the way forward to achieving an energy turnaround in Germany.