Germany, once an energy transition and prosumer champion, still provides a supportive framework for prosumers, drawing mainly on provisions adopted at the early stage of the energy transition: guaranteed and priority grid access, priority dispatch, proportionate administrative procedures and fees, investor certainty through guaranteed feed-in-tariffs. There have also been some positive actions recently, such as a successful support scheme for residential battery storage systems and the so called “Tenant Supply Act”, that incentivizes landlords and housing companies to provide tenants with solar energy. But the trend of the last legislative projects is rather negative. The disignated government must bring Germany back on track.
Trend is rather negative
There has been a large number of amendments to the Renewable Energy Act and other relevant energy legislation in the last years. The corresponding policy making process has become a tough lobby fight with a variety of different stakeholders. The result is rather poor: a lot of standstill or even setbacks. Some examples from the prosumer perspective:
Firstly, the decreasing feed-in-tariff (FIT) impacts the feasibility of small-scale renewable energy projects. Even retroactive changes to the FIT had been part of the discussions along the last revisions of the Renewable Energy Act (EEG) and seem to be not a taboo anymore in the future. The general trend towards tenders enhances the impression that investor certainty for small-scale prosumers is at risk.
Secondly, self-consumption of self-generated solar energy has become subject to “taxation”: the levy that German electricity consumers pay through their power bills to fund renewable energy (so called “EEG-Umlage”, 6,7 €-cent per kWh in 2018) has been extended to prosumers. They must pay now the levy on every self-consumed kWh. Prosumers with solar installations below 10 kW are exempted from paying the levy, but the controversy along the policy making process showed that this threshold is likely to be only temporary.
Thirdly, the highly controversial “Act on the Digitization of the Energy Transition” obliges prosumers with PV installations over 1 kW to install “high tech” smart meters at their own costs, and to pay metering fees from 60 to over 100 Euros – per year. The smart meters are supposed “to help integrate power from renewables into the electricity market” by providing grid operators with information and enable them to cut of feeding-in in times of overload. But the necessity of this “forced digitization” down to the smallest installation as well as the proportionality of the costs are highly questionable.
Regulatory framework is not future-proof
Germany´s energy system has entered a new era. But the regulatory framework has not: it still follows the paradigm of a multilevel energy system in which large-scale centrally generated energy is distributed via transportation and distribution networks to industrial and residential consumers. Consequently, small-scale prosumers still face the same (bureaucratic) requirements like big utilities.
The “Act on the Digitization of the Energy Transition” was anounced as big step towards the infrastructure for the future energy system, that is based on distributed renewable energy, energy efficiency and flexibility. But it turned out to be only a “Smart Meter-Act”, increasing costs for consumers and prosumers without convincing benefits for them or society.
The “Tenant Supply Act” also fails to fully unleash the enormous potential of turning tenants into prosumers. It should have gone further, e.g. by equating tenant supply with self-consumption (free of charges) and including district-supply under the support scheme.
Be it blockchain-based applications, such as peer-to-peer trading and management of green certificates, or new services around pooled storage systems (e.g. provision of balancing power) and dispatchable appliances (Demand Response) – innovative business cases are hardly feasible under the current regulatory framework. This applies especially to electric vehicles (EVs). Germany, respectively the powerful car making lobby, is struggling to shift to EVs. Contrary to countries like UK, Germany does not have a regulatory sandbox that might enable these innovative business cases.
New government must bring Germany back on track
Germany has lost its role as a pioneer in energy transition and prosumer support. To become a role model again both, the German government and parliament must use the upcoming legislative projects to get back on track with an ambitious and innovative regulatory framework. Amongst a large number of relevant aspects, the key issues will be the following:
- New approach for financing the energy transition: tax-financed instead of levy
- New (transparent!) system of network tariffs, charges and fees, with a fair allocation of costs and benefits, especially regarding self-consumption
- Proportionate administrative procedures, especially the de-bureaucratization of small-scale prosumer-business cases
- Proportionate technical rules & forced digitization
- Enabling framework for innovative business cases, e.g. a regulatory sandpit
- Empower tenants to become prosumers
- Empower low-income households to become prosumers
Germany must also use its political weight on EU level in the ongoing negotiations for an EU Energy Union as the new EU electricity and renewables directives will be leading the way for national governments. The discussions along the EU policy making process action will include the same issues as on national level.