Electricity Feed-In Law of 1991 ("Stromeinspeisungsgesetz")

The 1991 Electricity Feed-in Law ensured grid access for electricity generated from renewable energy sources. Moreover, it obliged utilities operating the public grid to pay premium prices (feed-in tariffs) for the electricity supplied from these renewable energy power plants. No public budget funds were involved, as the burden imposed by the law was exclusively borne by electricity suppliers and their customers. The premiums in the Electricity Feed-In Law were calculated annually as a percentage of the mean specific revenues for all electricity sold via the public electricity grid in the previous year, i.e., the average electricity price for all customers. In this way, the remuneration changed every year. Wind power plants and solar power plants received the highest remuneration with 90% of the mean specific revenues, followed by small hydro, biomass and biogas power plants smaller than 500 kW with 75%, (remuneration rose to 80% some years later). Hydro, biomass and biogas power plants larger than 500 kW, but smaller than 5 MW, received 65% of the mean specific revenues. The law did not cover plants larger than 5 MEW. The premium prices or tariffs decreased after 1996. This was because electricity prices had declined due to the phasing out of the coal levy ("Kohlepfennig"), and later due to the liberalisation of power markets. Thus, most generation facilities based on renewable energy sources that existed at the time of introduction of the Electricity Feed-In Law were excluded. It was then ensured that mainly new facilities would benefit from the law. The duration of the remuneration for an individual plant was not fixed; however, the constitutional protection of legitimate expectations provided some certainty to renewable energy generators. The law was amended in 1998, as the Electricity Feed-In Law had placed a significant, although unequal, financial burden on some utilities (especially those near the coast where the majority of wind turbines were situated). A "double cap" was introduced in the Electricity Feed-In Law, limiting the amount of renewable energy electricity that had to be remunerated according to the law. Regional electricity suppliers only had to purchase a maximum share of 5% of renewable energy electricity of their total electricity supply. The same cap applied to preliminary suppliers, leading to a total cap of 10%. This way, the total burden from the law was limited for individual utilities and their customers. The 10% threshold was almost reached in certain areas in northern Germany in 2000, which would have created a barrier for the further deployment of wind power technology. The law was considered to be the driving force behind the rapid expansion of wind power technology in Germany. The Renewable Energy Sources Act (Erneuerbare-Energien-Gesetz EEG) based on the same general principles (but without the cap) replaced the Electricity Feed-In Law in 2000.