The amendment of the Renewable Energy Sources Act 2021 – Biomass and landlord-to-tenant supply premium model

published on 19th February 2021

The generation of renewable energy with biomass has long been criticized for several reasons. In recent years, there has been no more large-scale expansion in this area. Similarly, the landlord-to-tenant supply premium model has never really caught on in Germany. In these two areas, some regulations have changed for the better in the EEG 2021. In the following, we will give you a brief overview of the legal and economic changes.

The impact of the amendment of the EEG on the topics of wind & photovoltaics can be found in separate articles.

Changes in the field of bioenergy

Also) in the field of promoting electricity from biogenic feedstocks, the EEG amendment has resulted in extensive changes. Essentially, the tender volumes were increased to 600 MW p.a. for biomass and 150 MW p.a. for biomethane. The maximum values of the relevant values to be applied in the context of the tender also incremented (16.4 ct/kWh). In order to avoid additional strain on the existing power grid bottlenecks in Germany and to promote flexible power generation from controllable renewable sources, 50 percent of the tender surcharges are to be allocated to southern Germany (southern quota). In order to ensure that flexible capacity is added, in the future only 45 percent of the installed capacity in the biogas sector will be eligible for compensation as the maximum rated capacity (75 percent for biomass plants). For biomethane plants, only 15 percent of the installed capacity will be subsidized as rated capacity via special tenders with increased maximum rates of 19.00 ct/kWh.

The EEG amendment clearly focuses on promoting flexible power generation aiming at balancing out the increasing share of fluctuating power generation. To this end, in addition to lowering the maximum rated power of new plants, the possibility of applying for the flexibility premium was extended and the flexibility surcharge was augmented from 40 € to 65€/kW. For both of the last-mentioned subsidies, however, at least 85 percent of the installed capacity must be called up on 4,000 quarter hours per year (2,000 for biomethane plants).

Changes in the field of landlord-to-tenant supply premium

Adjustments in the landlord-tenant supply premium were overdue, as the implementation of these electricity projects has lagged behind expectations since the beginning of this subsidy. However, only the future will show whether the amendments will show the desired effect.

In essence, own „applicable values” for the local electricity supply in the context of landlord-to-tenant electricity concepts were determined, which with 3.79 ct/kWh (up to 10 kWp), 3.52 ct/kWh (up to 40 kWp) and with 2.37 ct/kWh (up to 750 kWp and 100 kWp respectively) is significantly higher than the subsidy tending towards zero so far.

The possibility of the supply chain model is also new - unlike before, this allows the system operator to deliver the electricity to a suitable service provider, who then passes it on to the tenants. As a result, significantly more projects could be implemented here, as the complexity and lack of expertise with regard to residual electricity procurement, metering, billing, etc. had frequently represented an implementation hurdle in practice.

However, we still classify landlord-to-tenant electricity models as urgently relevant under strategic considerations. Due to the multi-year supply relationships and long-term acquisition opportunities with tenants, these models should be pursued and implemented even if economic viability is scarce.