German electricity agency extends renewable projects deadlines

Out-Law News | 09 Apr 2020 | 3:18 pm | 2 min. read

Renewable energy projects could be delayed due to the coronavirus pandemic. To avoid penalties the German Federal Network Agency has adjusted its processes.

The Federal Network Agency (BNetzA) in Germany regularly holds project auctions to meet tendering requirements for renewable energy projects.

When a project is awarded capacity, the BNetzA publishes this on the internet. Deadlines for the realisation of the project are triggered by this publication. Failure to meet relevant project milestones on time triggers penalties and developers give a security against potential penalties. In the worst case, projects may even lose the award completely.

Due to the coronavirus crisis, the BNetzA has now changed its processes for solar, onshore wind, biomass, and combined heat and power projects. Award decisions are not to be published on the internet for now, meaning that realisation deadlines will not be triggered and penalties will be avoided. BNetzA said that publication will be postponed to when the coronavirus situation has improved.

Where awarded capacities were published before 1 March 2020 the BNetzA said that extensions of time could be allowed for solar, onshore wind and biomass projects.

"The decision of the Federal Network Agency is an important step in the right direction," said Alice Boldis, expert on major projects in the construction and energy sectors at Pinsent Masons, the law firm behind Out-Law. "Where realisation deadlines for offshore wind projects are concerned, however, the agency has not yet granted any relaxation; the agency appears to believe that  – as for combined heat and power plants – due to the longer realisation deadlines, there is no need for action at the moment."

According to the BNetzA, the coronavirus pandemic has caused exceptional circumstances that might delay the realisation of solar, wind and biomass plants. Against this background it said it would, in principle, allow for "the extension of deadlines in relation to projects awarded in auctions."

Bidders of projects that have been awarded capacity can file an informal application for extension of the realisation deadline, but at the earliest eight months before the relevant realisation deadline and at the latest before the deadline ends. The application must clarify for how many months the deadline needs to be extended. "In the application, the extension of the deadline must be provided separately for each award", the handout said.

According to the BNetzA, the application has to make plausible why the deadline can not be met. Deadlines will only be extended when the delay is caused by the coronavirus pandemic. To prove this, relevant communication on the part of authorities or suppliers may be provided. "In most cases, self-disclosures and sweeping claims will not be appropriate in order to provide adequate proof to the reasons of a delay", said the BNetzA.

"Need for similar action may still arise where offshore wind projects are concerned," said Christian Lütkehaus, expert on major projects in the construction and energy sectors at Pinsent Masons with many years of experience advising on offshore wind projects.

The German Wind Energy at Sea Act (WindSeeG) introduced tendering for all offshore wind projects commissioned from 2021 onwards. For projects realised between 2021 and 2025, a transition system was introduced. All the capacities for projects falling within this scheme have been awarded in two auctions held in 2017 and 2018.

"The deadlines in relation to the 'technical readiness' of the offshore wind farms awarded under the transition scheme are indeed still in comfortable distance," said Lütkehaus. "However, the present law provides also for penalties where milestones set in relation to earlier-stage events are not met on time, and , in principle, it is possible even in such cases that awards may be canceled. Especially for projects in the Baltic Sea – that precede the projects in the North Sea – one can not be entirely certain that things may not get tight."