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Policy Department A: Economic and Scientific Policy ____________________________________________________________________________________________ Direct instrument - Feed-in-Tariff (Germany) The most comprehensive and effective instrument for deploying renewable technologies is the feed-in-tariff (FIT) as the case of the German “Erneuerbare-Energien-Gesetz (EEG)” shows. The EEG has served as a role model for dozens of renewable energy support schemes worldwide already. The FIT concept as realised in Germany includes the following elements: • Grid operators are obliged to provide grid connection of EEG power plants to the grid; • Mandatory uptake of renewable electricity by the grid operator. • Preference of EEG electricity over any other form of non-EEG power generation. • EEG plant operators receive remuneration for each kWhe fed into the grid for the period of 20 years. • Cost differences between EEG and electricity costs are covered by all electricity consumers. Historically, the EEG dates back to 1991, when its predecessor, the German “Stromeinspeisungsgesetz”, was enacted. The EEG with its basic structure as of today was enacted in 2000. Revisions followed in 2004, 2009. The EEG has provided a sufficient and stable economic framework for researchers and investors to gain confidence in a market to develop. For this, Germany has become the lead market worldwide for deploying onshore wind energy and photovoltaic systems. Only recently, we see other geographies developing similar momentum, such as Japan, China, Spain (though having collapsed again) and the USA. Given the success of the technology and market developments worldwide, the German EEG’s feed-in-tariffs for PV have been lowered with the EEG revision 2009, and will be additionally lowered still in 2010. The FIT instrument proved notably suited for all renewable energy technologies that are of long-term strategic importance, require long lead times, and still face a wide gap for break- even. The FIT scheme as implemented and further developed in Germany allows for continuous fine-tuning of the tariffs and support conditions. Subject to exemptions, the FIT comes close to a source taxation, i.e. following the 'polluter pays principle' as every consumer of electricity is paying a fair share (in 2009 this amounted to ~2 ct/kWhe in Germany). Support of specific technologies is possible within the framework of a FIT scheme. In Germany with the EEG there exists e.g. a ‘technology bonus’, which is a premium applicable to highly innovative technologies, e.g. fuel cell technology. With the German EEG revision 2009 the FIT for biogas from energy crops had to be raised as feedstock costs (in this case mostly maise) have risen for a number of reasons. The lesson learnt is that preferably energy technologies should be support that have no feedstock costs, such as wind or solar. Bioenergy crops should only be limitedly supported, if at all, as arable land is limited in Europe, and increasingly under pressure internationally. Given the long track record with the FIT in Germany, the lessons learnt there should be valuable to other EU Member States. 2.4.3. Indirect instruments Tax incentives are the most popular form of indirect instruments for R&D research support. All countries in the EU, together with most in the world including the USA, Japan, China, India and Brazil, have a tax incentive program for R&D. IP/A/ITRE/ST/2009-11 & 12 70 PE 440.278PDF Image | Policy Department Renewable Technologies
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