German Federal Grid Agency (BNetzA) extends realisation deadlines for renewable energy projects

• Germany

• Energy and infrastructure - Clean energy

17-04-2020

The lockdown of public life in Germany and the disruption of global economy due to the Coronavirus also complicate and delay the development, construction and commissioning of renewable energy projects in Germany. This has dangerous consequences as following the award, the project developers of renewable energy projects are obliged under mandatory law to realise the projects within strict deadlines. Otherwise, the award may lapse, the publicly subsidised market premium may be lost and thus, the project would no longer be bankable and the investment would no longer make sense commercially.

Therefore, the German Federal Grid Agency (BNetzA) considers it an exceptional situation for tender processes that have been consummated already, as well as running and future tender processes because bidders who have been awarded are as affected by the Coronavirus crisis as may be future bidders. So, BNetzA is willing to grant an extension of the project realisation deadline for certain renewable energy projects on a case-by-case basis and upon request of the awarded bidder. The request can be filed via email and is said by the agency to be dealt with “unbureaucratically”. Nevertheless, the following needs to be observed in order to be granted an extension:

• The request should not be filed earlier than eight (8) months prior to the original realisation deadline.
• The request needs to state a specific extension period required to ensure realisation of the project.
• The applicant needs to make plausible and specify the reasons for the delay of the project which give rise to the request, it being understood that the Coronavirus must have caused the delay (e.g. delayed delivery of components by suppliers, temporary shutdown of competent local authorities, etc.).

The pragmatism of the approach taken by the BNetzA gives rise to certain discrepancies with respect to the underlying applicable statutory law as the law does not provide for such extension. The legislator can only be urged to make the necessary changes to the law itself as otherwise, the approach taken by the BNetzA may not be fully fit for purpose.

Firstly, the penalty payments fall due upon expiry of the original realisation period when the award was being granted, therefore, regardless of any extension. This legal consequence could only be altered by the legislator but not by the BNetzA. However, the BNetzA has stated that in case of an extension having been granted by it in line with the above stated procedure, it will refrain from formally informing the transmission system operator of the expiry of the original realisation period and thereby prevent the penalty from being imposed.

Secondly, the period of public funding under the German Renewable Energy Act (EEG) will start at the latest 30 months after the award of an onshore wind project and 24 months after the award of a biomass project, regardless of whether the commissioning of the farm has occurred or not. This legal consequence directly derives from mandatory applicable law without any discretion of the BNetzA to resolve otherwise. Hence, at this point in time even if an extension is to be granted, the lifetime-profitability of the project may be adversely effected and the project financing might be at risk.

After all, it can be summarised that Coronavirus-related project risks for renewable energy projects have been identified and acknowledged by the relevant authorities. However, the relief being granted is of a limited nature and, it is therefore for the German legislator to amend the EEG accordingly in order to safeguard the further progress of the Energiewende.