Overall assessment

Updated December 2022

Generally speaking, Germany is fairly far behind in terms of transposing provisions from the RED II on RECs. However, in an amendment to the EEG in 2022, the German Government reformed its framework for renewables support schemes. In particular, the government reintroduced exemptions for ‘citizen energy companies’ from the requirement to participate in tenders to be able to receive support. In a previous scheme, introduced in 2016, the government had introduced a fairly loose definition of citizen energy companies, allowing them to benefit from certain exemptions while still needing to participate in tenders for wind projects above 750 kW. However, the criteria was not strict enough, and therefore in subsequent tenders under the scheme, more than 90% of winning bids came from citizen energy companies. Under the new amendments, this definition is strengthened significantly to prevent abuse or corporate capture. In return, REC-owned wind and solar projects (up to 18 MW for wind and up to 6 MW for solar) are fully exempted from having to participate in tenders. This is limited to one project every three years, limiting access to the scheme. Furthermore, a grant-to-loan scheme has been put in place so that citizen energy companies can fund necessary preliminary works before construction begins (e.g. feasibility studies, planning permits, legal assistance, etc). If the project goes forward, the grant that the citizen energy company receives turns into a loan, so that it can be repaid.

Overall, significant changes to the renewables support scheme for citizen energy companies are positive and go a long ways towards rectifying the unworkable framework in the EEG after 2016. However, significant gaps remain, particularly around building out an enabling framework generally, along with a regulatory framework that allows for RECs to share energy.

Detailed assessment

Assessment of obstacles and potential for development of ECs

No official assessment has been carried out.

Removal of unjustified regulatory & administrative barriers

Grid connection procedures are simplified for small-scale PV installations, but nothing specifically for RECs.

DSO duties around cooperation with ECs and facilitation of energy sharing

A pre-existing scheme around tenant supply (meterstroom) is based around a pre-existing supply model. This cannot be credibly be equated with energy sharing. While the government had indicated a plan to develop such a framework, this has been delayed.

Fair, proportionate, and transparent registration & licensing procedures

Not addressed in the transposition.

Incentives connected to network tariffs based on a CBA

Not addressed in the transposition.

Non-discriminatory treatment as market participant

Not addressed in the transposition.

Accessibility to low-income & vulnerable households

Not addressed in the transposition.

Tools to access finance

The 2022 Amendments to the EEAG establish a Grant-to-loan scheme for Citizen Energy Companies:

Funding is provided for the costs of the planning and approval phase of onshore wind energy plants. Eligible measures include all measures in the preliminary planning of a project (such as feasibility studies, site analyses, economic feasibility calculations) as well as other necessary expert opinions that contribute to the realisation of the wind energy plants.

Up to 70% of the costs for the planning and approval of wind energy projects can be subsidised, up to a maximum of 200,000 euros (maximum subsidy limit according to the De minimis Regulation within three fiscal years). The subsidy must be repaid if an EEG subsidy has been registered, or if an award has been made in an EEG tender procedure.

The Federal revolving grant-to-loan scheme was modelled off a similar scheme at State level: In 2018, the state government of Schleswig-Holsteinset up a citizen energy fund (Bürgerenergiefonds), a revolving fund which provides risk capital for citizen/community energy projects to pre-finance their upfront costs.119 The fund is administered by the Investment Bank of Schleswig-Holstein, the 100% state owned development bank of Schleswig-Holstein. It started operation in 2018 and was the first of its kind in Germany. The fund serves to finance preparatory measures for citizen energy projects in the sectors of renewable heat, new mobility, renewable power generation, energy efficiency and digitalization.

There are several promotional banks and financing institutions like Kreditanstalt für Wiederaufbau (KfW) and the Development Agency for Agribusiness and Rural Areas (Landwirtschaftliche Rentenbank) that provide low interest loans for community energy initiatives. Several federal state governments including those of Schleswig-Holstein and Thuringia provide start up financing via state owned promotional banks or via dedicated community energy funds.

This type of support can help RECs finance early stages of work, before construction starts, which is often hard and risky for energy communities to finance directly. This mechanism therefore will de-risk the process for RECs. Unfortunately, the fund has faced continual delays throughout 2022. It is unclear when this fund will become operational.

Tools to access information

There is nothing official at the Federal level. However, several State governments offer advice, guidance, capacity building, networking and financial support (e.g., through regional energy agencies, see for instance the case of North Rhine-Westphalia with its former Platform Community Energy & Energy Cooperatives). The federal state government of Baden-Wurttemberg supports coaching and advisory services for energy cooperatives in the frame of the project "Citizens Full of Energy" in cooperation with the regional association of cooperatives and the regional association of citizens’ energy cooperatives.

Regulatory capacity building for public authorities

The Länder may enact further reaching provisions on public participation and on increasing acceptance for the use of new installations. This can enable more local supportive mechanisms at the local and regional level; however, it does not necessarily provide authorities with stronger capacity.

NECP reporting on enabling frameworks

Not addressed in the transposition. Member States are required via the Governance Regulation (2018/1999) to report on their enabling frameworks for RECs by 15 March 2023.

Support Scheme adapted for RECs

RECs taken into account when designing eligibility/participation requirements

REC projects are exempt from the tendering process. This includes wind turbines on land owned by ‘citizen energy companies’ (defined in the EEAG in line with the REC definition from the Renewables Directive) with an installed capacity of up to and including 18 megawatts. All solar systems with an installed capacity of up to and including 1 megawatt are exempt, and solar systems owned by citizen energy companies with an installed capacity of up to and including 6 megawatts are exempt from tenders. These thresholds make the most of what is allowed under the new State aid guidelines on climate, energy and environmental protection (CEEAG).

There are a couple of important elements that have been integrated into the tendering exemption for RECs, mainly to prevent corporate capture and abuse, as this was a big problem in previous schemes to allow RECs to participate in auctions. First is the definition. It has been significantly narrowed, in particular to require a high level of citizen involvement and control. There is also a limit to how often an REC can use this tendering exemption. Specifically, only companies who have not commissioned any plants of the same technology and the same segment (segment = either ground mounted or roof top above 1 MW) in the previous three years have the right to be exempted for the particular project of the same technology and the same segment.

This above limitations should help prevent abuse, while also providing RECs with a bike lane to access renewables support, without having to compete against larger more professional project developers.

Form of support for community production projects

  • Feed-in tariffs are available for installations under 100 kW.
  • Guaranteed market premium are available for installations under 1 MW

Above 1 MW, citizen energy companies receive a price according to the winning bids from the tenders under the normal competitive bidding process (i.e. tender). In this sense, they do not need to worry about submitting a bid for their project.