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Germany: Solar Energy Encouragements Reduced

(Sept. 10, 2010) On August 11, 2010, Germany amended the Renewable Energy Act of 2008 (Erstes Gesetz zur Änderung des Erneuerbare-Energien-Gesetzes, BUNDESGESETZBLATT I at 1170, amending Erneuerbare-Energien-Gesetz, Oct. 25, 2008, BUNDESGESETZBLATT I at 2074, updated version available at The amending Act continues to reduce the guaranteed above-market rates for solar energy production, a process that began in 2008 when the Renewable Energy Act replaced earlier legislation of 1991 and 2000. The earlier laws had granted more generous guaranteed rates for photovoltaic power production (Begründung, Konsolidierte Fassung von Bundestag-Drucksache 16/8148, Dec. 5, 2007, & Bundestag-Drucksache 16/9477, June 4, 2008, at 4-6,

Since these earlier enactments, Germany has required of the electric power companies that they allow consumers and other private parties who generate electricity through photovoltaic installations to feed the thus generated electricity into the electric grid and that the power companies compensate the generators of this electricity at fixed rates that exceed the market rate for electricity. This scheme intended to encourage homeowners and private companies to invest in photovoltaic installations by guaranteeing that they could sell the generated electricity at a profit.

By 2008, however, photovoltaic technology had become less expensive and it became apparent that this required a reduction in the guaranteed price for generated power, so as to prevent generators of photovoltaic power from reaping a windfall profit at the expense of the German consumer, who had to pay more for electricity. To remedy this situation, the Renewable Energy Act of 2008 significantly reduced the rates for photovoltaic electricity. (Gesetzesentwurf, Mar. 23, 2010, Bundestag-Drucksache 17/1147,

The Amending Act of 2010 continues this trend by further reducing the guaranteed rates for photovoltaic electricity by, on the average, another ten percent. The new rates apply only to new installations that commenced operations after June 30, 2010. Now, as before the reform, the highest rates are granted for small, rooftop installations, and somewhat lower rates are granted to installations on former industrial sites. For new installations on cropland, however, the reform abolishes the guaranteed rates.