Premium tariff (Market Premium)
Updated: 11.01.2019
Author: Tim Sternkopf
Starting with reform of the EEG in 2014, Market Premium has become the main support scheme for electricity from renewable energy sources. Following the amendment of the EEG in 2017, the market premium for most technologies has to be determined through a market-oriented procedure - a tender. Since the tender only applies for projects of a certain size, there are still remaining new projects entitled of a classical market premium. This is being calculated as the difference between a fixed feed-in and the monthly market value of the sold electricity (Annex I EEG 2017). The plant operator has to sell his electricity directly, i.e. to a third party by a supply agreement or at the stock market, and claim the so-called market premium from the grid operator. Nevertheless, the produced electricity is still prioritized in the power take-up, transport and distribution by the grid operator (§ 11 par. 1 EEG 2017).
Eligible technologies
In general, all technologies used to generate electricity from renewable sources are eligible for the market premium (§ 19 par. 1 EEG 2017). The following conditions apply:
- Actual sale of electricity. The market premium will be paid only for electricity that has actually been fed into the grid and purchased by a third party (§ 20 par. 1 no. 1 EEG 2017);
- Technical requirements. Power plants shall be equipped with technical devices that enable the grid operator to reduce output by remote means at any time and to measure the amount of electricity fed in by each system (§ 20 par. 1-4 EEG 2017);
- Accounting. Electricity shall be accounted for in a balancing group or a sub-balancing group which only accounts for electricity that is directly sold and for which the market premium is received. If electricity in the balancing group does not fulfil these requirements, it must not be fed in by the plant operator (§ 20 par. 1 no. 4 EEG 2017).
Wind energy | Eligible. Extra technical requirement for wind installation: Plants commissioned before the 1 July 2017 must guarantee to respect the provisions of the Ordinance on System Services by Wind Energy Plants when connecting the plant to the grid (§ 9 par. 6 EEG 2017, SDLWindV). |
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Solar energy | Eligible. Following additional technical requirements apply for solar installations: Solar plants must feature the technical capacity of being remote-controlled for the case of network overload and of reporting in real-time the actual feed-in power (§ 9 par. 1 and 2 EEG 2017). More solar installations, regardless of ownership, are considered one plant if they are on the same property or building and have been commissioned during 12 consequent calendar months. This consideration serves solely for the determination of the installed capacity (§ 9 par. 3 EEG 2017).
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Geothermal energy | Eligible (§ 19 par. 1 EEG 2017). |
Biogas | Biogas is eligible for a feed-in tariff (§ 19 par. 1 EEG 2017). According to the definition of the technology (§ 3 no. 11 EEG 2017), biogas is every gas extracted through the anaerobic digestion of biomass. § 3 no. 21 EEG 2017 specifies that biomass includes biogas, biomethane, landfill gas and gas from purification plants and from the biological degradable part of household and industrial waste. Biogas plant operators (except for plants using exclusively manure or waste) must additionally guarantee for plants commissioned after 31 December 2016 and fermentation residue storages built after 31 December 2011, that the hydraulic retention time is at least 150 days (§ 9 par. 5 EEG 2017). Further pre-requirements are:
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Hydro-power | Eligible (§ 19 par 1 EEG 2017). |
Biomass | Eligible (§ 19 par 1 EEG 2017).
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Amount
- If the plant operator receives a regional certificate, the tariff level shall be reduced by EUR ct. 0.1 per KWh (§ 53b EEG 2017).
- The tariff level for tax except electricity shall be reduced by the amount of the tax exemption (§ 53c EEG 2017).
- The tariff level will be reduced to zero in case that
- a plant operator has not registered his plant as required by law (§ 52 par. 1 no. 1 EEG 2017 in conjunction with § 71 no. 1 EEG 2017; AnlRegV). A plant operator has to register his plant at the Federal Network Agency (§ 6 par. 1 EEG 2017). This information to be submitted is defined by law and includes, for example, the name and contact details of the plant operator, the location of the power plant, the type of power plant, and its installed capacity (§ 6 par. 2 EEG 2014).
- The tariff level will be reduced to the actual market value in the case that
- technical requirements are not met (§ 52 par. 2 no. 1 EEG 2017 in conjunction § 9 par. 1, 2, 5 or 6 EEG 2017);
- the plant operator has switched between direct marketing of the electricity and the feed-in tariff without informing the grid operator (§ 52 par. 2 no. 2 EEG 2017);
- a plant operator breaches the prohibition of multiple sale electricity from renewable energy sources and mine gas (§ 52 par. 2 no. 5 EEG 2017 in conjunction with § 80 EEG 2017).
Solar energy | The amount of tariff depends on the site of production and the installed capacity.
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Wind energy |
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Geothermal energy | EUR ct 25.2 per kWh (§ 45 EEG 2017) minus EUR ct 0.2 per kWh (§ 53 no. 1 EEG 2017). |
Biogas |
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Hydro-power | EUR ct 3.47 – 12.40 per kWh (depending on plant size and date of commissioning) (§ 40 par. 1-4 EEG 2017). |
Biomass | EUR ct 5.71 – 13.32 per kWh (according to plant size) (§ 42 EEG 2017). |
Addressees
A plant operator is entitled to receive a market premium according to the subsequent provisions of the law (§ 19 par. 1 EEG 2014) for the amount of energy fed into the grid. The grid operator is required to purchase, transfer and distribute the feed-in electricity (§ 11 EEG 2017). A plant operator is one who, irrespective of the issue of ownership, uses a plant to generate electricity from renewable energy sources (§ 3 no. 2 EEG 2017). Grid operators are the operators of grid systems of all voltages for general electricity supply (§ 3 no. 36 EEG 2017).
Procedure
Process flow | Statutory law does not set out a formal application process. According to the EEG, the conclusion of a contract between the grid operator and the plant operator must not be made a condition for the payment of tariffs (§ 7 par. 1 EEG 2017). |
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Competent authority | The implementation of the EEG is monitored by the Federal Network Agency (§ 85 EEG 2017). The Act is evaluated by the Federal Government (§ 97 EEG 2017). |
Degression
For most technologies, the tariff levels will decrease in regular periods of time. New plants will receive the tariff level applicable on the day they are put into operation. This tariff level will apply for the entire payment period, i.e. for 20 years (§ 25 EEG 2017). For some technologies, the percentages by which the tariff levels will decrease are set by law and are not subject to change. For other technologies the percentage by which the tariff levels will decrease depend on the amount of newly installed capacity.
Wind energy |
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Solar energy | The degression contains a basis degression rate of 0.5% every month (§ 49 par. 1 EEG 2017). The EEG 2017 has defined a target-corridor for the development of solar power of 2,500 MW per annum (§ 49 par. 2 EEG 2017). If the real development surpasses the corridor, the degression rate will be increased from 0.5% to up to 2.8% (§ 49 par. 2 EEG 2017). If the development of solar power goes below the targets of the corridor, the degression rate is reduced and in extreme cases, the tariff rate will be even increased by up to 3% (§ 49 par. 3 EEG 2017). The current degression rates can be retrieved from www.bundesnetzagentur.de/cln_1931/DE/Sachgebiete/ElektrizitaetundGas/Unternehmen_Institutionen/ErneuerbareEnergien/Photovoltaik/DatenMeldgn_EEG-VergSaetze/DatenMeldgn_EEG-VergSaetze_node.html (only in German). |
Geothermal energy | The degression rate will be 5% every year from 2021 (§ 45 par. 2 EEG 2017). |
Biogas | Since 2018, the degression rate for landfill gas sewage gas is 1.5% annually (§ 41 par. 4 EEG 2017). Since April 2017, the degression of biogas from other forms of biomass has a degression rate of 0.5% every 6 months (1 April and 1 October) (§ 44a EEG 2017). |
Hydro-power | Since 2018, the degression rate is 0.5% every year (§ 40 par. 1 no. 1 EEG 2017). |
Biomass | Since April 2017, the degression for biomass has a degression rate of 0.5% every 6 months (1 April and 1 October) (§ 44a EEG 2017). |
Eligibility period
The tariff payment period is 20 years (§ 25 EEG 2017).
Distribution of costs
Consumers | The costs of the premium tariff scheme are borne by the final consumers. |
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Distribution mechanism |
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