Solar I Package - Strong Support for Decentralised Energy Supply for Buildings!

Following tough negotiations, the German Federal Government adopted the long-awaited Solar Package. The bill was presented in August 2023 and gave stakeholders hope that deregulation would facilitate photovoltaic expansion. More recently, the bill had become a problem child for some associations, which had started to doubt it would be enacted. The adoption of the Package alleviated these fears, despite differences to the original bill on certain issues.

The law (still) focuses on improving tenant electricity supply, the introduction of “shared building supply” as a new model for the supply of electricity from photovoltaic systems (“PV systems”) in buildings, as well as “subsidy-free supply” as a new form of marketing. These changes establish the legal cornerstones for the comprehensive autonomous supply of electricity from PV systems mounted on the rooves of apartment and industrial buildings. This generates new opportunities for decentralised supply models for utility companies, but also for the original partners in the real estate sector. Landlords can tap into the economic potential of their buildings by either establishing and operating PV systems or leasing roof space.

Specifically:

Simplified landlord-to-tenant electricity

Under the current law, landlord-to-tenant electricity supply may only utilise solar panels mounted on residential properties (§ 21 (3) of the Renewable Energy Sources Act (EEG) and § 42 of the Energy Industry Act (EnWG)). In the future, panels may also be mounted on industrial and auxiliary buildings (such as garages). Tenant electricity also no longer needs to be used within residential buildings.

The Solar Package extends the maximum permissible duration of landlord-to-tenant electricity supply contracts to two years.
Additionally, this maximum only applies where the customer is a consumer.

The downside to deregulation is that the operator of the PV system and the end customer may no longer belong to a corporate group (PV system operators must provide a declaration to this end). This is designed to prevent the misuse of subsidies.

Regulatory hurdles often dissuaded operators of landlord-to-tenant electricity systems from claiming subsidies where industrial and residential leases were involved. The low level of subsidies rarely justified the administrative and advisory costs. Liberalisation makes the landlord-to-tenant model more attractive.

Energy sharing

The Solar Package introduces a new supply model: the “shared building supply” model (§ 42b (1) of the EnWG). This model is independent of and parallel to the landlord-to-tenant supply model and releases users of the model from numerous supply obligations to enable the supply of solar energy within a building without the normal level of bureaucracy. In particular, operators of energy-sharing systems (PV systems) are not required to supply the residual electricity that the PV system cannot cover.
Complex questions of implementation arise with respect to the measurement every quarter of an hour (end customer energy reference quantities must be measured every quarter of an hour), the determination of the allocation key, and the assignment of quantities to individual customers.

Landlord-to-tenant electricity model or energy-sharing model?

Energy sharing (§ 42b EnWG) and landlord-to-tenant electricity (§ 42a EnWG) should form distinct models for the consumption of electricity from PV systems close to where it is generated. ;In contrast to landlord-to-tenant models, suppliers in energy-sharing models do not have to offer full supply. Accordingly, the law removes the obligations on suppliers to conclude a contract to supply residual energy and to use a mixed calculation. The Package does not foresee any additional funding for the quantity of electricity supplied through energy-sharing models – as distinct from landlord-to-tenant systems – because the full supply obligation and certain other supplier obligations have been removed. Compensation will still be available as usual under the EEG for electricity fed into the grid unless the PV system operator has selected to feed electricity into the grid without receiving payment of the EEG subsidy (unentgeltliche Abnahme).

Energy sharing could therefore become an uncomplicated alternative form of supply, especially in residentiary or mixed-use buildings.

Direct marketing and sale of energy without EEG subsidies

Many project developers deliberately kept facilities small to avoid the direct marketing obligation for excess energy. This obligation now only applies to facilities with an installed capacity of 200 kilowatts or more.

Photovoltaic systems with an installed capacity of between 100 and 200 KW can now be earmarked as free-of-subsidy installations. While system operators will not receive any additional payment of EEG subsidies for electricity that is fed into the grid, they also do not need to undertake any direct marketing. Obviously, this form of marketing will only make sense when it is foreseen that solar energy consumption will be highly decentralised.

Summary

The potential of large rooves of industrial properties for mounting PV systems is far from exhausted. The Solar I Package implements important improvements for the decentralisation of energy supply within buildings. It reduces red tape, opens up roof space potential, and facilitates participation by expanding supply options for project developers.

However, this potential can still be utilised more fully: associations involved in the most recent hearing of the Committee for Climate Protection and Energy of 22 April 2024 called for various outstanding guidelines to be provided. These include legal frameworks for energy sharing and measuring the direct marketing limit by the amount of electricity fed into the grid, as well as specific conditions related to the commercial tax privilege.

After the Solar I Package comes Solar II!

Find out more about the improvements introduced for solar power systems here.

Dr Christof Aha
Dr Malaika Ahlers
Anton Buro
Leopold Linden