The new German government elected in next month’s general elections is likely to implement significant reforms to or replace the renewable energy act (EEG) within the next four years, extend support for combined heat and power (CHP) generation and pave the way for the electrification of the transport and heating sectors.

The future of Germany’s lignite and coal-fired plants is less certain as only a coalition government including the Green Party is likely to result in any significant and rapid legally mandated closures while other parties would seek different approaches to meeting the country’s ambition greenhouse gas (GHG) reduction targets for 2020 and beyond.

The present government, a coalition between Chancellor Angela Merkel’s CDU/CSU union and the SPD party, in 2013-17 passed the most wide ranging power market reform package since market liberalisation in the late 1990s, and decided against the introduction of a capacity market and in favour of several reserve solutions to ensure grid stability and security of supply. Other energy policy milestones included reforms to the EEG which introduced auctions for new renewable installations and reforms to the CHP law which geared subsidies towards gas-fired units and introduced auctions for new units with a capacity of 1-50MW.

Major tasks lie ahead for the next government to implement Germany’s energy transition as energy policy moves on from the power market design debate to future decarbonisation strategies as the ambitious GHG reduction target for 2020 — a 40pc reduction relative to a 1990 base line — approaches while other challenges include the increasing decentralisation and digitalisation of the German and the European power system.

Based on an analysis of election manifestos, recent position papers and statements by party officials, Germany is likely to ease into the next phase of the energy transition rather than implement radical changes within the next four years.

The EEG, Germany’s flagship renewable energy act, is likely to face the most significant changes.

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Source: Argus Media