The EU has approved a 28 billion euro German renewable energy scheme
The European Commission announced on 21st Dec that it had approved the German government’s 28 billion euro ($29.69 billion) renewable energy support scheme, which aims to expand wind and solar power use rapidly.
The policy, which will replace an existing renewables support scheme, will be in effect until 2026 and will help Germany meet its target of producing 80% of its renewable energy by 2030.
The European Commission stated that the scheme was “necessary and appropriate” to promote renewable energy and reduce global warming emissions. Its positive environmental impact outweighed any potential competition distortions.
“The German Renewable Energy Act 2023 scheme will help to decarbonize electricity production further,” stated EU Competition Commissioner Margrethe Vestager.
The scheme pays renewable energy producers a premium on top of the market price for selling their power. In addition, small generators may be eligible for a feed-in tariff, providing a guaranteed electricity price.
Expansion of clean energy production will be critical to meeting Germany’s goal of eliminating net greenhouse gas emissions by 2045 and partially filling the energy supply gap left by Russia’s decision to cut off most of the gas it sends to Europe this year.
Some EU countries have criticized Berlin’s response to Europe’s energy crisis. Concerns centered on Germany’s broader plan to spend up to 200 billion euros in subsidies to shield consumers and businesses from rising energy costs – a sum that many other countries cannot afford and that some argue will distort competition in the European Union’s single market.
The Commission stated that Berlin’s renewable state aid was limited to the “bare minimum” and included safeguards to reduce competition distortions. For example, companies must compete in government tenders for assistance.
Germany will also phase out existing support for renewable producers in times of negative power prices by 2027 to avoid compensating companies twice.
