German Energy Law
German energy law covers a variety of energy-related subjects and legal areas. There is no single codification of German energy law and several provisions can be found in various statutes, ordinances, and other sources. Many areas of German energy law are strongly influenced by European energy law.
The Electricity and gas sector have been characterized by a large number of enterprises and a strong involvement of municipalities. Even though there is a general tendency for privatization, often can be found a form of private/public partnership .In June 2005 the German Parliament passed an amendments to the nation’s existing Energy Industry Act in order to comply with the requirements of the Gas and Electricity Acceleration Directives of the European Union(Directives 2003/54/EC and 2003/55/EC, respectively).In Germany,Municipal Companies(Stadtwerke)are involved in natural gas distribution, electricity production and distribution as well as other activities such as public transport and revenues from these operations are used partially to finance other activities (Katharina Vera Boesche(2016), German Energy Law in Raphael J. Heffron and Gavin F.M. Little(2016),Delivering Energy Law and Policy in the EU and the US ,p 389).
The Renewable Energy Sources act (Erneuerbare-Energien-Gesetz – EEG ) – meanwhile in its 2014 version – is widely know for its renewable energy support regime. However, core provisions of German energy law are contained in the German Energy Act of 7 July 2005 . The law aims at ensuring a safe, cost-effective, consumer-friendly, efficient and environmentally-friendly supply of power and gas as well as efficient and unrestricted competition and the safeguarding of an effective and reliable operation of power grids.
The Renewable Energy Act 2017 (EEG 2017) introduces a tendering system for most renewable energy (RE) sources. Where, under the previous EEG 2014, participation in tariff auctions was only compulsory for ground mounted photovoltaic systems, now onshore wind and, under a newly introduced Offshore Wind Act (WindSeeG), offshore wind projects have to take part in such auctions. To receive the market premium (Marktprämie) from the grid operator, project developers must now bid in technology-specific auctions for certain tender volumes.
Whilst the introduction of auctions is a fundamental change to the support scheme, several other elements of the EEG remain unchanged. In particular, the priority of RE sources regarding connection and access to the public grid remains unchanged.
The market premium is still paid for 20 years, but the amount of the market premium depends on the awarded amount following a successful bid. The direct marketing of energy (Direktvermarktung) which has been a feature of the RE regime since the introduction of the Renewable Energy Act in 2009 remains mandatory. RE sources must be sold on the spot market in order for the successful bidder to be able to claim remuneration. The remuneration of a RE plant operator is therefore twofold: it receives the market premium from the grid operator and also it receives the agreed purchase price from the direct marketing counterparty .
The tendering procedures are carried out by the Federal Grid Agency.(FGA)This agency publishes the submission dates for the individual auction on Internet and the bidders must use standard forms published by the FGA. The bid must contain the market premium for the energy production of the RE source and the volume which the bidder is seeking to be installed. Bids can be excluded if they do not fulfill the requirements stipulated by the EEG 2017 or, in case of offshore wind projects, the WindSeeG (Offshore Wind Act). To file a bid, the bidders deposit a bid bond which serves as security for the grid operator’s claims for penalties in the event of non or delayed realization of the project. The amount of the bid bond depends on the RE technology. To participate in the tender process for onshore wind the bidder has to provide a bid bond of 30 EUR/kWh.
The Federal Grid Agency will choose the lowest bids in the auction in an award procedure which is set out in detail in the EEG 2017 and, for offshore wind projects, the WindSeeG. The successful bidders will be notified and their names and their projects will be published on the homepage of the Agency.
Successful bidders will be entitled to claim a market premium from the grid operator to whose grid the plant is connected to. The market premium will be paid in the amount as awarded (“pay-as-bid” procedure) for a term of twenty years starting with the commissioning of the project.
A special authority responsible for the deregulation of the energy sector does not exist in Germany, although there have been proposals for an Authority with similar tasks as the Regulatory Authority for Telecommunications and Postal Services.As far as deregulations is governed by the GWB ,it is enforced by the Federal Cartel Office which are generally departments of energy plants and the enforcement of the EnWG are carried out by a number a different authorities, mainly by the Ministries of the German States.
However, to a considerable extent regulatory energy law in Germany in enforced by private parties before the civil courts.
Conclusions
For Germany, Russia is the major supplier of oil, natural gas and hard coal. The bilateral relationship is one of the major priorities and challenges for German energy policy. There is a question mark of how the relationship will develop in the future. Market power has changed to Gazprom’s benefit. As a result, Gazprom has managed to maintain oil-indexed prices in long-term contracts with German companies and has increased its role in German market segments while Germany’s Ruhrgas has lost its strategic position. Through this lens, a tremor in the close strategic partnership can be sensed.
Regarding common EU energy policy, Germany has been ambivalent. Under its presidency in 2007, Germany backed more assertive climate and environmental policy and pushed the “20- 20-20” strategy. As for internal market development and a more competitive market, Germany has taken a more critical stance as German energy companies have lobbied to water down the original proposals with respect to unbundling and the “Gazprom clause” because of their close ties to the Russian company. These strategic business alliances, and the Nord Stream deal in 2005, set Germany and other continental gas-consuming countries with close ties to Gazprom apart from the new Central Eastern European Member States and the UK.
Germany’s ambivalent role towards European energy policy became even more evident when Energiewende, the energy transition project, was approved in June 2011. Energiewende puts Germany in the position of frontrunner on a fast track to more sustainable energy policy. This has implications for its neighbors and the EU. First of all, it adds a new thread of conflict to its European energy relations. In particular, its neighbors have felt sidelined by the speed of the political decisions. Although the decision on the country’s energy mix lies within its national competences, the German transition impacts heavily on its neighbors. This is most evident with uncontrolled loop flows.8 Second, in order to pursue the goals of Energiewende more cost efficiently and provide for more investment security, German energy policies depend on a consistent climate and energy path at the international level, or at least on the European level.
Flavius Preoteasa LLM International Energy Law and Policy
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