Jones Day Talks: Developments in Germany’s Wind Power Regulations
On December 21, 2018, the so-called Energy Collective Law came into force, amending, inter alia, the German Renewable Energies Act (“EEG”). This is the seventh amendment to the EEG 2017 since it came into force on January 1, 2017. Among other things, an obligation was introduced to equip wind turbines with need-controlled night-time identification from July 1, 2020. This obligation also applies to existing turbines; an estimated 18,000 wind turbines in Germany will therefore have to be retrofitted.
From the current case law, a decision of the Bavarian Higher Administrative Court of April 3, 2019, on the applicability of the so-called 10 H regulation is relevant in particular for planners and operators of wind farms in Bavaria. According to this decision, the 10 H regulation must also be observed when granting amendment permits in accordance with the German Federal Emission Control Act if a valid and binding permit for the wind farm already exists and neither the locations nor the height of the turbines change.
Jones Day's Kerstin Henrich explains these current topics in the field of wind energy law.
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Read the full transcript
Dave Dalton:
Wind farm operators in Germany are constantly facing new legal developments. Last December, the so-called Energy Collective Law came into force. This law introduced various amendments of, among others, the German Renewable Energies Act, the Act on Combined Heat and Power generation and the Energy Industry Act. With regard to the Renewable Energies Act, the so-called EEG, this is the seventh amendment since its entry into force in January 2017.
Dave Dalton:
Apart from the legislative changes, wind farm operators should also take the current case law into account. For wind energy projects in Bavaria, a recent decision of the Bavarian Administrative Court of Appeals on the application of the so-called 10H regulation is especially relevant. Today we talk with Kerstin Henrich, an M&A partner from the Düsseldorf office, about the current developments in wind energy law in Germany. I'm Dave Dalton, you're listening to Jones Day Talks.
Dave Dalton:
Kerstin Henrich has more than 13 years of experience advising corporate and financial investors on complex M&A transactions, venture capital investments and transactions in the renewable energy sector. She has advised investors and family offices on the acquisition sale of wind and solar energy projects with a total capacity of hundreds of megawatts. Kerstin, thanks for talking with us today.
Kerstin Henrich:
You're welcome, David.
Dave Dalton:
Okay. The Energy Collective Law brings the seventh amendment to the Renewable Energies Act or the EEG in just over two years. In your opinion, which new regulation in the EEG has the greatest practical relevance?
Kerstin Henrich:
I would say the obligation to equip wind turbines with what is known as need-control nighttime identification. This obligation concerns new and existing installation status. Existing wind farms must be retrofitted.
Dave Dalton:
Okay. Can you talk about that in more detail?
Kerstin Henrich:
In Germany, wind turbines with a total height of 100 meters or more must be marked by flashing signals at night for aviation security reasons. Currently, the systems flash all night long, even when no aircraft is approaching. In the future, plant operators will be obliged to install need-control nighttime identification. To put it simply, this means that wind turbines only start flashing at night when an aircraft actually approaches. This is intended to improve the acceptance of wind farms by local residents.
Dave Dalton:
Okay. That makes some sense. When does this obligation go into effect or apply?
Kerstin Henrich:
From the 1st of July 2020, and not only for new plants, but also for existing plants. That is existing plants must be retrofitted. Incidentally, this duty does not only apply to onshore plants, but also to certain offshore plants. Namely, those in the territorial sea in zone one of the exclusive economic zone of the North Sea and those in the exclusive economic zone of the Baltic Sea.
Dave Dalton:
Okay. Let's talk about estimates. How many existing installations are affected by this retrofit obligation? We're talking a lot probably.
Kerstin Henrich:
Yeah. According to estimates by the [Expert Agency Wind Energy Ashore], dating of February 2019. Approximately 18,000 wind turbines in Germany are affected.
Dave Dalton:
18,000. That's not insignificant. That's a huge number. Are there any estimates of the approximate costs of the retrofit for these plant operators?
Kerstin Henrich:
That depends on which technology is used. Until now, only rather expensive radar systems were legally permitted, which according to the explanatory memorandum to the Energy Collective Law, cost around €100,000 per turbine. But the new Section 9, paragraph 8 EEG, expressly provides that equipment for the use of transponder signals from aircraft can also be used. This technical solution is considerably more cost effective. The explanatory memorandum to the law states that the costs for the receivers of the transponder signals are approximately €30,000 for an entire wind farm. But one should know that at the moment, this transponder technology is not yet approved. However, the general administrative regulation for the marking of aviation obstacles is to be adapted soon.
Dave Dalton:
Okay so maybe the costs themselves aren't insurmountable, but the timeframe for getting this done, the implementation of the retrofit is ambitious. Are there options for extensions in the law?
Kerstin Henrich:
Indeed, that's quite an ambitious timeframe and the Federal Network Agency can extend the implementation period if the necessary technical equipment is not available on the market in sufficient quantities.
Dave Dalton:
Okay. Are there any exceptions to this obligation to equip wind turbines with need-controlled nighttime identification? Is that a possibility?
Kerstin Henrich:
Yes. The Federal Network Agency may, upon application, allow exceptions in individual cases. In particular, for smaller wind farms if the fulfillment of the obligation is economically unreasonable for them. However, it's important to note that this is a discretionary decision of the Federal Network Agency in individual cases. And the criteria, according to which such exemptions augmented are not yet clear.
Dave Dalton:
Let's talk about how easy it is for an operator of an existing plant to retrofit to meet these obligations. Are there certain permits that have to be obtained to do this?
Kerstin Henrich:
Yes, of course David. We're talking about Germany, of course you need a permit.
Dave Dalton:
Okay. Right.
Kerstin Henrich:
First of all, the device must be approved by German air traffic control for nighttime identification. Before it can be used on a turbine at a specific location, the approval of the responsible aviation authority is also required. From emission control law perspective, the installation will often be an ancillary installation to the wind turbine that is prior to installation, at least a so-called notification of change in accordance with Section 15 of the Federal Emission Control Act will then be required. However, it really depends on the concrete technical solution in the individual case that one must really look at the permitting requirement in each individual case.
Dave Dalton:
Okay. Worst case scenario. What happens if a plant operator does not install nighttime identification in time?
Kerstin Henrich:
Then Section 52 EEG applies that is the feed and tariff is reduced to the monthly market value as long as the plant operator violate its obligation. That is during this period, the operator loses the right to payment off the market premium.
Dave Dalton:
Well that's bad. What should operators of existing plants actually be doing at the moment to make sure that doesn't happen?
Kerstin Henrich:
Many operators will want to use transponder technology for retrofitting because it offers considerable cost advantages over radar technology. But as already mentioned, transponder technology is not yet approved. Plant operators should therefore keep a close eye on developments and obtain information, for example, on the websites of The Expert and Agency Wind Energy Ashore, or the German Wind Energy Association.
Dave Dalton:
We've spoken about this before Kerstin, it's very important to stay informed regarding current case law regarding wind farms. Are there any decisions from the last few months the planners and operators need to know about?
Kerstin Henrich:
Yes, definitely. There was a recent decision of the Bavarian Administrative Court of Appeals of 3rd April, 2019 on the applicability of the so-called 10H regulation in Bavaria. This decision was made an interim legal proceedings and it's really important.
Dave Dalton:
Okay. Talk about what the 10H regulation is.
Kerstin Henrich:
Under Article 82 of the Bavarian building code, wind turbines must maintain a minimum distance of 10 times the height from residential buildings. This provision is referred to as 10H regulation. If it is not complied with, the planning privilege for the construction of wind farms in the so-called external area in accordance with Section 35 of the federal building code does not apply. This 10H regulation entered into force in 2014. The height of a wind turbine is the hub height plus the road or radius. Modern turbines for use on land are often around 200 meters high. So according to the 10H regulation such turbines must therefore at least be two kilometers away from the nearest residential development.
Dave Dalton:
Okay. What was the specific procedure about?
Kerstin Henrich:
An environmental association had applied for provisional legal protection against the order to immediately execute an amendment permit for a wind farm. Originally the permit for this wind farm, which is to consist of 10 turbines, was granted before the 10H regulation entered into force. All the 10 wind turbines did not comply with a minimum distance of 10 times their height to the nearest residential buildings. And that permit became final and binding. In August '15, the operator applied for an amendment permit under the Federal Emission Control Act. The locations of the 10 wind turbines, which will remain unchanged, but a different type of turbine was to be erected and specifically one with a lower overall height than that off the originally planned turbines.
Kerstin Henrich:
The competent authority granted this amendment permit in summer '17. The environmental association then filed an action for rescission against this amendment permit and also an application to restore the suspense of effect of that action for rescission. The competent administrative court rejected this application for legal protection of the first instance. The association then filed an appeal with the Bavarian Administrative Court of Appeals.
Dave Dalton:
And so the Bavarian Administrative Court of Appeals, then granted the application in summary proceedings?
Kerstin Henrich:
Correct. The Court of Appeals came to the conclusion that the contested amendment permit is probably unlawful because the wind farm project did not comply with a minimum distance of 10H. That is the court held that the 10H regulation must be observed for the granting of an amendment permit.
Dave Dalton:
And this applies even though the project developer had already received a valid and binding permit for the same locations, only for another type of turbine, in this case, even a higher turbine type?
Kerstin Henrich:
Yes. In the opinion of the court, the existence of a legally binding original permit is irrelevant to the question of how far the proposed amendment must be examined for its eligibility for approval. The legally binding effect of the first permit does not restrict the scope of that assessment. On the contrary, according to the court, the binding effect of the first permit does not apply to changes of the project. So the court held that the amendment permit is to be measured against the entire relevant substantive law. In particular, also against the relevant provisions of planning law and building regulations. And this includes the 10H regulations.
Dave Dalton:
Well, obviously this is a very important decision, especially for wind farm projects in Bavaria. Has this decision already been published?
Kerstin Henrich:
No. The decision is quite new, but I assume that it will be published at short notice. The filing number is 22CS19.345.
Dave Dalton:
Kerstin, always great talking with you. Great overview of what's going on in the wind power landscape in Germany recently. Let's do this again soon.
Kerstin Henrich:
Wonderful. Thank you very much, David.
Dave Dalton:
For Kerstin's contact information or for more information on any of Jones Day practice areas, visit jonesday.com. Thanks for listening to Jones Day Talks, I'm Dave Dalton. We'll talk to you next time.
Disclaimer:
Thank you for listening to Jones Day Talks. Comments heard on Jones Day Talks should not be construed as legal advice regarding any specific facts or circumstances. The opinions expressed on Jones day talks are those of lawyers appearing on the program and do not necessarily reflect those of the firm. For more information, please visit jonesday.com.:
