Germany’s New Solar Strategy: More space and less red tape

On 5 May 2023, the German Economy and Climate Ministry (BMWK) has released its Solar Strategy (read the German text here), aiming to speed up the expansion of solar energy in Germany. Split into two legal packages (Solar Package I and Solar Package II), it establishes a framework for BMWK's measures until 2025.

Germany has set a goal of becoming greenhouse gas neutral by 2035, with renewable energies accounting for 80% of the country's electricity mix by 2030. Solar is expected to be a major contributor to these climate and energy objectives. The installed solar capacity is projected to reach 215 GW by 2030, requiring an annual increase of 22 GW by 2026.

With Solar Package I, the German government intends to pass several "quick fix" measures before Parliament's summer break. Afterwards, they will start preparing Solar Package II which will address more complex implementation measures. Here are some of the measures the packages are to include:

Ground mounted solar

Ground mounted photovoltaic (PV) panels that are not installed on, in or at a building, are seen as an opportunity to rapidly expand PV systems. The expansion goal for ground mounted solar is set at 11 GW annually by 2026. In Solar Package I the BMWK considers to:

• increase the maximum bid size in the solar tenders;
• waive the need to have a land-use plan in place before permitting of certain types of PV installations;
• explicitly allow erecting PV installations in commercial and industrial areas where they shall also be allowed to cover more ground than normally allowed in such areas;
• deem so-called less-favoured areas for farming suitable for solar installations by default. The current need of a further implementing act of the Federal States would then be replaced with the need to actively opt out such areas from PV development;
• introduce the concept of “biodiversity PV” on the 4% of arable land which German farmers will not use for production under the EU's Common Agricultural Policy;
• allow not only operators of “typical” ground mounted solar panels to offer a financial participation to the local municipalities, but also operators of floating solar installations or of solar installations on so-called other physical structures.

For the Solar Package II the BMWK considers to:

• allow the erection of ground mounted solar installations without the need of a project specific permit if the panels are erected in conformity with an existing zoning plan;
• further encourage the use of already sealed areas by implementing a new category for PV on parking lots by introducing higher funding and easier permitting;
• ease the restrictions for floating solar installations e.g. regarding minimum distance to shore and percentage of area covered.

Rooftop solar

To facilitate the equipment of rooftops with PV systems, the BMWK proposes to:

• adjust the rules around the direct marketing obligation for solar installations with an installed capacity of more than 100 kW. This is to address the problem that in practice, especially PV operators with a high self-consumption rate (e.g. supermarkets or warehouses), often face difficulties finding a direct marketer who is willing to bear the balancing risks of low and difficult-to-predict electricity feed-in;
• adjust the regulations for viewing different solar installations in close proximity as one installation. Introduced to ensure that the rules for determining the level of remuneration, the obligation to participate in tenders and regarding various technical requirements are not circumvented by artificial "plant splitting" they can also lead to disadvantages for operators who take a plant into operation a little later than a neighbor and might receive only a lower remuneration or would have to meet higher technical requirements;
• allow rooftop PV systems to repower and transfer existing feed-in/market-premium tariffs to the new installations;
• abolish an exemption for roof top solar on existing buildings which since 2012 banned PV systems on non-residential buildings in the outdoor area, i.e. on areas outside of development plans or built-up areas, from the remuneration for roof top systems but only the lower remuneration for ground mounted solar. 

Landlord-to-tenant supply and joint building supply

Landlords who supply electricity to their tenants under the current landlord-to-tenant supply model shall be allowed to install PV systems also on adjacent non-residential buildings such as car parks or garages. In addition, the model shall be made available to landlords and tenants in pure commercial buildings.

Also, the ministry intends to introduce a new model of “joint building supply” which would allow users of a building (tenants, co-owners) to consume electricity from a PV system located behind the grid connection point without burdening the operator of the PV system with the usual obligations electricity suppliers have to meet. Other than in the landlord-to-tenant supply model the tenants would themselves conclude the additional electricity supply agreements for the surplus electricity they need on top. 

A third model, offering purely financial participation to tenants from a full feed-in roof-top PV plant presented in an earlier draft of the PV strategy will not be pursued further.

Faster grid connections

The acceleration of grid connections has been an ongoing project for the German government. To help along the efforts, the BMWK is planning a string of measures:

• Similarly, to how the expansion of power lines for the grid and the broadband expansion have been driven forward, the BMWK is planning to introduce the obligation of landowners to tolerate the laying and operation of connection lines for ground mounted solar parks in return for compensation. 
• For smaller PV plants the certifications of plants is to be simplified or accelerated and a simplified grid connection procedure is supposed to be expanded.
• With the Solar Package II the BMWK plans to standardize the technical connection regulation (Technische Anschlussbedingungen, TAB) and start a sector dialogue on the acceleration of grid connections.

Interlocking of energy and tax law

Currently a variety of tax regulations and obligations are limiting the expansion of renewable energy projects. To remove these obstacles, the BMWK considers the following changes: 

• a landlord will no longer have to start paying trade tax on their rental income if they also supply electricity from a PV plant;
• plant operators without taxable electricity volumes will be exempt from registration, notification and reporting requirements; 
• the BMWK aims to prevent non-profit corporations from losing their status when they generate electricity; 
• the obligation to file an annual VAT return will be eliminated, and the treatment of different plants as one for electricity tax purposes is set for revision and;
• the BMWK also plans to enable the assignment of open spaces with PV plants to agricultural and forestry assets.

Balcony-PV

To encourage the use of plug-in solar devices, or "balcony-PV",  the PV strategy proposes simplifying or eliminating reporting requirements. It also suggests including plug-in solar devices as privileged measures under the German Condominium Act and German Civil Code to increase their use. Balcony-PV systems shall not be legally aggregated to prevent them from reaching thresholds that would trigger technical regulations. The current threshold of 600 watts should be raised to make it easier for more plug-in solar systems to register.

What´s next?

The first of the two solar packages is set to be presented to the Federal Cabinet before the parliamentarian summer break, possibly already in June 2023. Afterwards it will have to pass the parliament (Bundestag) as well as the German Federal Council (Bundesrat). Following the adaption of the first solar package the ministry will then begin to prepare the second package.

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