German government approves historic renewable energy package

Renewables

Germany – The German government approved the so-called “Easter Package,” which represents the most significant changes to German energy policy since the implementation of competitive auctions in 2017.

Germany intends to use 80 percent renewable energy in total electricity consumption by 2030. Germany intends to install 10 GW of new onshore wind energy every year beginning in 2025. The Government proposal raises annual auction volumes to up to 12 GW in order to achieve this expansion in onshore wind. The package also increased German offshore wind targets, implying that Germany will build more than 10 GW of new wind capacity each year beginning in 2025.

Germany’s Economy and Energy Minister, Robert Habeck, announced that the German government had passed a historic 500-page package aimed at accelerating renewable energy deployment and expanding grid connections. This so-called “Easter Package” is a clear commitment to an energy system based on renewables. It will mark the beginning of a massive increase in wind, solar, and grid deployment in Germany.

In light of the Ukraine conflict, the German government has repeatedly emphasized the importance of renewables for Germany’s energy security. Renewables, according to Finance Minister Christian Lindner, are “freedom energies.”

New onshore wind

Changes to Germany’s Renewable Energy Law (EEG) are at the heart of the package, enshrining a new renewable energy target of 80% of total electricity consumption by 2030. This entails doubling the share of renewables in German electricity, which was 42 percent in 2021. According to the government, rapid adoption of electric vehicles (EVs) and renewable-based electrification of industry and heating will result in a total electricity demand of 750 TWh by 2030. Germany aims to meet nearly 100 percent of its electricity demand with renewables by 2035.

In order to accomplish this, the package modifies annual auction volumes as well as annual wind energy installation targets. Germany intends to install 10 GW of new onshore wind capacity per year beginning in 2025. Annual auction volumes will be increased to up to 12 GW per year to make this possible. On this trajectory, Germany would have 115 GW of onshore wind capacity by 2030.

The definition of renewable energies as an overriding matter of public interest and public security is central to the Easter Package. This will expedite the approval of new renewable energy projects and reduce delays caused by legal appeals. The definition excludes military interests. Grid planning will be aligned with the accelerated expansion of renewables, with the addition of 36 new grid expansion and optimization projects.

To mitigate the impact of rising electricity prices on businesses and households, the German government decided to abolish the EEG levy previously paid by electricity consumers and begin funding renewable energy projects from the federal budget.

Legislation changes

The package envisions new offshore wind targets of 30 GW by 2030, 40 GW by 2035, and at least 70 GW by 2045. To make this a reality, the German government has committed to prioritizing offshore wind in maritime spatial planning, shortening permitting procedures, and hiring more staff in permitting authorities.

Furthermore, the package intends to auction off undeveloped sites. In the future, the expansion of offshore wind in Germany will be based on two equally important pillars: auctions of pre-surveyed sites by state authorities on the one hand, and auctions of sites that have not yet been pre-developed on the other. Centrally pre-developed areas would be auctioned off based on price, with successful bidders receiving 20-year Contracts for Difference (CfDs). Many other European countries have used CfDs successfully. Not-centrally-developed areas would be auctioned off in accordance with a set of criteria, which would include qualitative criteria as well.

It is critical that these qualitative criteria allow for differentiation among individual bids while not significantly increasing planning and financing costs. The government is also investigating the possibility of auctioning wind energy in conjunction with renewable hydrogen production.

Legislative changes

In this political term, the Easter Package is not the last legislative change for wind energy. To reduce Germany’s reliance on Russian fossil fuel imports, Habeck promised to push the previously announced “Summer Package” into May. This package will include a national repowering strategy, new measures to ensure sufficient wind energy sites, permitting improvements, and a new strategy to balance wind energy expansion with biodiversity and nature protection.

Earlier this week, the government announced plans for a new approach to nature and species protection in order to ensure environmentally friendly wind energy expansion. Furthermore, the government announced yesterday improvements to the peaceful coexistence of onshore wind farms and civil aviation radar stations, as well as weather radars.

The government will reduce the minimum distance between wind turbines and radar stations in order to make room for an additional 5 GW of wind energy, or approximately 1,000 new turbines.

Supply chain disruptions, rising international prices for raw materials and components, and a potential shortage of sufficiently skilled workers, according to Minister Habeck, are the main challenges to future growth. He promised to work closely with the German wind industry to overcome these obstacles and ensure that the ambitious new volumes are delivered.

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