Summary: In recent years, German lawmakers have shown willingness to restrict the scope of the (partial) exemptions from the EEG levy (EEG-Umlage) which is paid by consumers to support the higher costs of renewable energy. Affected parties however may be facing new risks – particularly in regards to protectionary exemptions for existing power producing facilities.
Though the decision may not be surprising, energy consumers who have opted to produce their own power may want to review whether their approach is still conform with the latest revision of the Renewable Energies Act (Erneuerbare-Energien-Gesetz – EEG). In recent years, German lawmakers have shown willingness to restrict the scope of the (partial) exemptions from the EEG levy (EEG-Umlage) which is paid by consumers to support the higher costs of renewable energy. Affected parties however may be facing new risks – particularly in regards to protectionary exemptions for existing power producing facilities. The decision of the Higher Regional Court provides transmission grid operators and power production companies improved transparency in balancing the additional costs of renewable energy production.
The Renewable Energies Act provides for beneficial treatment of self-produced energy as one of the means of reducing the economic burden of the EEG levy along with the special equalisation scheme (Besondere Ausgleichregelung) available to large energy consumers.
In its decision from 31 October 2016 (case number 2 U 78/14.EnWG), the Second Civil Senate of the Higher Regional Court of Berlin focused on the conditions of the EEG levy exemption for producers of their own energy – often referred to as the “producer’s privilege” (Eigenstromprivileg). The relevant provision in Section 37 para. 1 sentence 1 of the Renewable Energies Act 2009 requires that electricity producers who provide power to consumers must draw energy from their primary grid operator and compensate for this consumed energy accordingly. The producer’s privilege applies in cases in which there is no provision of energy to consumers in this sense, because the energy is produced and used by the consumers themselves and therefore no compensation is levied (so-called self-produced energy).
In the case reviewed by the Higher Regional Court, the plaintiff was the operator of a waste treatment facility which produced high-pressure steam by burning waste. The defendant was the operator of a thermal power station which produced electrical energy through a steam turbine which was partially powered by high pressure steam provided by the plaintiff under a steam supply contract. A portion of the electricity produced was provided to the plaintiff by the defendant for the plaintiff’s own use.
The question of whether the producer’s privilege was applicable in this case centred on the issue of whether there was a provision of electricity or whether the production of electrical energy was carried out by the plaintiff itself and would therefore qualify as self-produced energy.
The court followed previous case law – though the argumentation may not have been thoroughly convincing – and rejected an exemption from the EEG levy. The judges concluded that the fact that the plaintiff was drawing power from the public power grid shows that there was a provision of power and that therefore there could be no consumption of self-produced power, though previous decisions of the Federal Court of Justice as the highest court in the land and the application of Section 37 para. 3 sentence 2 no. 1 and no. 2 of the Renewable Energies Act 2012 do not view power drawn from public distribution grids as necessarily subject to the EEG levy. However, the court rightfully regards the fact that the producer and the consumer are two distinct entities as a decisive factor. Since the plaintiff is essentially only providing the fuel, it does not bear the economic risk in connection with the power production and can therefore not be regarded as a self-producer of energy.