DGAP-News

2G Energy AG supports coming into force of 2016 amendment to German Combined Heat and Power Generation Act (KWKG) - Seite 2

systems or closed distribution grids as part of the supply of industrial
areas, tenant electricity and city districts solutions, for example, rather
than within public supply grids. Such systems receive their own CHP subsidy
for supplies to properties, as well as corresponding CHP subsidies when
being fed into public grids, if the full German Renewable Energies Act
(EEG) levy is paid on the CHP electricity they generate. Moreover, smaller
CHP systems up to 50 kW benefit from the setting of the subsidy duration to
60,000 full utilization hours without time limitation. The potentials of
such contracting models (which are desirable from an energy policy
perspective) can be tapped by energy utilities and contractors especially
in the residential sector, and within industrial and commercial structures.

Decentralized site supplies remain an attractive alternative despite
capping of proprietary electricity payment
The only fly in the ointment in relation to the amended KWKG is the
reduction in compensation for self-utilized electricity generated from
proprietary CHP systems: about one quarter in the case of lower performance
classes up to 100 kW, and the CHP subsidy falls away entirely for new
systems above 100 kW electric output. As announced, a proportional EEG levy
(2016: 35 %, 2017: 40 %) still has to be paid until the end of 2017 for CHP
systems for proprietary supply ordered after August 1, 2014. Overall, the
highly efficient cogeneration of electricity and heating remains an
attractive alternative for decentralized site supplies for industrial and
commercial operations, as well as the residential sector, following the
amendment to the KWKG, because the EEG levy and grid payments will rise
further prospectively, so that costs for proprietary electricity can lie
significantly below grid electricity purchasing costs. In combination with
heating utilization concepts for the respective site, investments in gas
operated CHP power plants remain economical, with relatively short payback
periods.

The KWKG 2016 now sets designated volume targets for expansion in absolute
terawatt hours (TWh): CHP net electricity generation is to be increased to
110 TWh (corresponding to 19 %) by 2020, and to 120 TWh (corresponding to
20 %) by 2025. Given approximately 6,000 operating hours per year and an
average of 500 kW(el), these 120 TWh would correspond to around 40,000 CHP
systems. Although this falls short of the previous expansion target of 25 %
of total electricity generation by 2020, maximum generation volumes double
to EUR 1.5 billion annually. As to date, support is to be financed through