Act on Combined Heat and Power (KWKG)

Combined heat and power
date: august 2011

The Act on Combined Heat and Power in its practical use

You find a publication it extracts concerning the Act on Combined Heat and Power 2009 (KWKG 2009)

I. Introduction

- Decision of the Federal Parliament about the amendment of the Act on Combined Heat and Power (KWKG) on 06 June 2008 as a consequence of the “decisions of Meseberg”

–› Became effective on 01 January 2009

- Share of electricity out of CHP within Germany around 11 % concerning the total energy production

- Aim of the CHP-amendment: doubling on ca. 25 % until 2020

- Basic regulations:

- Primary obligation of connection and purchase, insofar equalisation to EEG-plants

- Support of existing plants and modernised plants expires as so far until 2009/2010

- Support of annex and modernisation also above 2 MW

–› Limitation to highly efficient CHP in terms of the EU-directive

- Bonus also electricity for own consumption

- Support of new construction and extension of head grids

- Introduction of a maximum rate of assistance of 750 million Euro per year (including heat grids)

–› When the rate of assistance is reached, the support of plants over 10 MW is shortened, § 7 section 9 KWKG

–› Complete supplementary payment within the following years

II. Fundamentals of connection

1. Connection and Purchase

- § 4 section 1 sentence 1 KWKG 2009

“Grid operators are obliged to connect CHP-plants in terms of 5 to their grid und to purchase the produced CHP-electricity out of these plants with priority.”

–› Obligation of purchase is equal to the purchase of EEG-electricity!

- Obligation of purchase and remuneration is omitted with the expiring of the bonus payments

–› NEW: in the future not valid for micro CHP of less than 50 kW

–› Also after the omission of the obligation of purchase and remuneration, a primary grid connection for all CHP-plants is secured

2. Remuneration

- § 4 section 3 sentence 1 KWKG 2009: remuneration

“The absorbed CHP-electricity has to be remunerated with the price that the operator of the CHP-plant and the grid operator have agreed on. A bonus has also to be paid.”

- Composition of the remuneration per kWh as previously:

Basic charge + bonus

- Calculation of the basic charge also not changed:

1. Agreement between grid operator and plant operator

2. usual price plus avoided network charges

3. Proof of a willing buyer (a third person)

3. Obliged party for claim

- § 4 section 1 sentence 1 KWKG 2009: grid operator

–› Obligation meets the grid operator whose grid has the shortest distance to the location of the plant and whose grid is suitable in a technical way to purchase the produced electricity

–› technical qualification of the grid also with an economically reasonable extension of the grid

- § 4 section 6 sentence 1 KWKG 2009:

“As far as a grid is technically not able to purchase the CHP-electricity, the obligations of section 1 are given to the operator whose grid is the nearest one with a higher voltage level.”

4. Claimant

- operator of the CHP-plant (ownership it not relevant)

- according to § 3 section 10 sentence 1 KWKG 2009 these are at first:

“…the ones who feed in electricity in of the within section 9 mentioned grids or who provide electricity for own consumption…”

- own consumption = direct supply to an end consumer

- out of a plant constructed for own consumption


- or out of a CHP-plant that has be constructed and operated exclusively or mainly for the supply of certain end consumers

5. CHP-electricity for own consumption

- § 4 section 3a KWKG 2009: claim on payment of a bonus also for self-used electricity

–› When CHP-electricity is not fed-in to a grid of public supply

–› Obliged grid operator is the one to whose grid the plant is indirectly connected

- Reason: aim to increase the share of CHP-electricity production to 25 % until 2020, otherwise not manageable

–› Effective support of the extension of CHP as a whole

- But: no claim for the “usual price” or for avoided network charges!

Is the new regulation of § 4 section 3a KWKG 2009 also valid for CHP-plants which have been launched before 01 January 2009?

- Law text: valueless, but is admits of this interpretation

–› No explicit temporary regulation

- Preamble:

“With the payment of the bonus existing plants can be modernised und new plants can be constructed.”

- Statement of the Federal Office of Economics and Export Control: is also valid for already existing plants!

III. Size of the bonus

1. General matter

- For plants which have been put into continuous operation until 31 December 2008 the already known regulations for remuneration out of the KWKG 2002 are still existing

–› Regarding size and duration

- Requirements for the payment of a bonus:

- Authorisation of the CHP-plant as a plant which is qualified for a bonus payment, § 6 section 1 sentence 1 KWKG 2009

–› Classification of the CHP-plant to one of the categories

–› Upon application of the Federal Office of Economics and Export Control (BAFA)

2. Overview about the plant categories

- Unchanged plant categories compared to the KWKG 2002:

- Old existing plants (until 31 December 1989)

- New existing plants (01 January 1990 until 01 April 2002)

- Modernised plants (modernisation between 01 April 2002 and 31 May 2005)

- New small CHP-plants up to 2 MW and fuel cells (from 01 April 2002)

- New plant categories according to the KWKG 2009:

- Highly efficient modernised plants (01 January 2009 until 31 December 2016)

- New CHP-plants of more than 2 MW and fuel cells (from 01 April 2002)

3. Bonus for new small CHP-plants

- Small CHP up to 50 kW, § 7 section 6 KWKG 2009:

- Size of bonus 5.11 cent per kilowatt-hour from start of continuous operation

a) for plants which have been launched between 01 April 2002 and 01 January 2009 as far as they do not displace an already existing district heat supply out of CHP

b) for plants which have been launched between 01 January 2009 und 31 December 2016 as far as they do not displace an already existing district heat supply out of CHP and as far as they are highly efficient

- “Highly efficient”: § 3 section 11 KWKG 2009, plant has to fulfil the requirements of the directive 2004/8/EG

–› In particular 10 % economisation of primary energy compared to separated production of electricity and heat

- “Displacement”: closedown of an existing CHP-plant and replacement by one or several new CHP-plant(s), § 5 section 2 sentence 3 KWKG 2009 is not a displacement of an existing district heat supply

- Small CHP over 50 kW, § 7 section 5 KWKG 2009:

–› a) plants which have been put into continuous operation between 01 April 2002 and 01 January 2009 as far as they do not displace an already existing district heat supply out of CHP

Size of bonus:
2002/2003 2.56 cent per kilowatt-hour

2004/2005 2.40 cent per kilowatt-hour

2006/2007 2.25 cent per kilowatt-hour

2008/2009 2.10 cent per kilowatt-hour

2010 1.94 cent per kilowatt-hour

b) For plants which have been put into continuous operation after 01 January 2009 and until 31 December 2016

- Must be highly efficient

- No displacement of an already existing district heat supply out of KWK

- Attention: Replacement of an already existing CHP-plant is no displacement!

Size of bonus: law text is conflicting!

- Clarified in the scope of the EnLAG (editorial mistake)

- § 7 section 5 sentence 5 KWKG: output-related grading

–› Share of the output up to 50 kW: 5.11 cent per kilowatt-hour

–› Share of the output up to 2 MW: 2.10 cent per kilowatt-hour

- Duration: six years after entry of a continuous operation, maximum: 30,000 hours of general use

Exception: four years or 30,000 hours of general use for plants which are directly connected to businesses of the processing trade and which supply it mainly with process heat for the coverage of the industrial need

- “Processing trade” = sections A and C of the classification of economical sectors 2008

–› B. Mining and generation of stones and earth

–› C. Processing trade, e. g. production of food products and animal feed, production and improvement of textiles, production of cellulose, paper, carton etc.

–› List is available under www.destatis.de (Federal Statistical Office)

- Fuel cells, § 7 section 7 KWKG 2009:

- Commissioning after 01 April 2002 and until 31 December 2016

- Size of bonus: 5.11 cent per kilowatt-hour (dependant on the output)

- Duration of bonus: ten years from entry of a continuous operation

4. Bonus for new “big” CHP-plants

- CHP of more than 2 MW, § 7 section 8 KWKG 2009:

- Entry of a continuous operation after 01 January 2009 and until 31 December 2016

- As far as highly efficient and no displacement of an already existing heat district supply out of CHP

- Size of bonus: § 7 section 8 sentence s in connection with section 4 sentence 2

- 5.11 cent per kilowatt-hour for a share of the output of 50 kW

- 2.1 cent per kilowatt-hour for a share of the output between 50 kW and 2 MW

- 1.5 cent per kilowatt-hour for a share of the output of more than 2 MW

- Duration of bonus: six years from entry of a continuous operation, maximum 30,000 hours of general use

- Exception: four years or rather 30,000 hours of general use for plants which are directly connected to businesses of the processing trade and which supply it mainly with process heat for the coverage of the industrial need

–› According to the legislator only minor support needs

5. Highly efficient modernised CHP-plants

- New plant category within § 5 section 1 number 4 KWKG:

- Requirements:

1. Existing plant according to numbers 1 or 2

–› Entry of a continuous operation until 01 April 2004

2. Modernisation or Replacement through a new plant

3. Highly efficient (replacement)-plant

- Modernisation = renewal of important parts of the plant which determine the efficiency and costs for renewal of at least 50 % of the construction costs

- Duration of bonus: six years from entry of a continuous operation, maximum 30,000 hours of general use

- Exception: four years or rather 30,000 hours of general use for plants which are directly connected to businesses of the processing trade and which supply it mainly with process heat for the coverage of the industrial need

- Size of bonus: graded with relation to the output

- 5.11 cent per kilowatt-hour for a share of the output of 50 kW

- 2.1 cent per kilowatt-hour for a share of the output between 50 kW and 2 MW

- 1.5 cent per kilowatt-hour for a share of the output of more than 2 MW

6. Calculation of the grading related to the output

Problem: How is it possible to calculate the share of the fed-in electricity which have to be remunerated with the particular bonuses?

- Possibility 1: according to the installed capacity

–› For 100 kW-plants: 50 % of the electricity with the first grade of bonus and 50 % with the second grade of bonus

- Possibility 2: according to the real feed-in capacity during a year as within the EEG

–› Yearly feed-in capacity 8,760 h = real capacity

–› For the feeder more beneficial, as seen in an absolute way higher share of the first grade of bonus

–› Not clearly regulated by law, therefore rather possibility 1


IV. Definition of the term plant

1. General matter

- § 3 section 2 KWKG 2009: list of the covered technologies

–› E. g. steam turbines, gas turbines, combustion engines, stirling engines, ORC-plants, fuel cells

- The following things have to be given:

- Existence of a CHP-process

- Production process within a stationary technical plant, § 3 section 1 sentence 1 KWKG 2009

- apart from that: wide understanding of the term plant

–› i. e. every generator

2. Summarisation of several plants

- § 3 section 3 sentence 2 KWKG 2009

“Several directly connected small CHP-plants at one local are seen as one CHP-plant regarding the mentioned maximum capacity within sentence 1, § 5 und § 7.”

- Criterions for a summarisation:

- Direct connection of the plants

- Operation at the same location (distance of max. 500 m)

- Person of the operator is irrelevant

- Only small CHP-plants are covered, i. e. such ones up to 2 MW

- According to the old legal situation is the summarisation only relevant for the assessment whether a small CHP-plant up to 2 MW is existing

- According to the new legal situation is the summarisation also of importance for the calculation of the size of bonus

- Capacity thresholds introduced by the amendment

- Increased bonus for a share of capacity up to 50 kW and between 50 kW and 2 MW is granted to the “whole plant” only once

Problem: What is with CHP-plants over 2 MW?

- The KWKG 2009 does not provide a regulation concerning a summarisation of several big CHP-plants or concerning a combination of small and big CHP-plants

–› Consequence: the increased bonuses for the share of out up to 50 kW and between 50 kW and 2 MW is granted for every single plants regarding directly connected big CHP-plants

–› It is doubtful whether this is volitional by the legislator!

- Maybe only an editorial mistake of the legislator

–› Output-related bonus payment had been introduced subsequently into the legislative procedure, § 3 section 3 sentence 2 KWKG 2009 had not been adapted

V. New construction, annexe, modernisation

VI. Feed-in management

1. Legal basic

- Within the KWKG 2009 there is no legal basic for the regulation of the capacity of CHP-plants regarding network overload

–› only within § 4 section 1 sentence 2 KWKG there is an allusion to the equality with EEG-plants regarding the obligation of purchase

- § 11 section 1 EEG 2009:

Notwithstanding their obligation in accordance with section 9, grid system operators shall be entitled, by way of exception, to take technical control over installations connected to their grid system with a capacity of over 100 kilowatts for the generation of electricity from renewable energy sources, combined heat and power generation or mine gas, if

1. the grid capacity in the respective grid system area would otherwise be overloaded on account of that electricity,

2. they have ensured that the largest possible quantity of electricity from renewable energy sources and from combined heat and power generation is being purchased, and

3. they have called up the data on the current feed-in situation in the relevant region of the grid system.”

- According to § 2 EEG, the field of application of the EEG ranges not to CHP-plants

–› due to the explicit naming of CHP-plants within § 11 EEG 2009 this has to be seen as the legal basic regarding feed-in management

- Problem: Are the obligations according to § 6 number 1 EEG also valid for CHP-plants?

= for plants with a capacity of more than 100 kW are obliged to equip themselves with an operational or technical attachment to reduce the feed-in capacity and to call up the current supply

–› Doubtful! No direct, at the most analogue application

2. Compensation according to the hardship provision

- § 12 section 1 EEG 2009:

The grid system operator whose grid system gives rise to the need for the assumption of technical control under section 11(1) shall compensate those installation operators who, on account of the measures under section 11(1), were not able to feed in electricity to the extent agreed upon. Where no agreement has been reached, the lost tariffs and revenues from the use of heat less the expenses saved shall be paid.”

- Problem: Do also CHP-plants receive a compensation?

–› Guideline of the BNetzA concerning EEG feed-in management (as of 29 July 2010), the different promotion approach might argue against an assignability of EEG and KWKG

–› Approach of the KWKG which is close to the market maybe requires not the same extent of protection as the low-risk EEG-approach

- counter arguments: when an equal treatment of EEG- and CHP-plants concerning a reduction of power takes place, then it has to be the same regarding compensation!

–› Wording of § 12 section 1 EEG 2009: related to all kinds of operators who were not able to feed-in due to measures of § 11 section 1 EEG 2009 (feed-in management)

–› Despite of a support within the KWKG which is close to the market the risk of the “WHETHER” regarding remuneration of EEG- and CHP-plants is equal!

–› Within the KWKG possibly lower remuneration and other periods of support, but as guaranteed as within the EEG

According to our opinion CHP-plants have to be compensated according to § 12 EEG in the case of feed-in management!

VII. CHP within internal logistics

VIII. Support of heat grids

§ 5a KWGK: heat grid operator have a claim on bonus payments for new construction and annexe of heat grids when

- Start of annexe/new construction from 01 January 2009

- Commissioning at the latest 31 December 2020

- Supply of connected heat consumers within the initial phase (to more than 50 %) and for the planned completion of the grid area of at least 60 % out of CHP-plants

- Authorisation of the heat grid, § 6a KWKG

- New construction = first-time construction including all elements

- Extension = Extension for the connection of consumers, who have not been served previously, or reinforcement measures, which lead to an increase of the heat flow of 50 %

- Bonus payment: one-time participation within the costs regarding extension and new construction, § 7a KWKG

- 1.00 € per mm nominal diametre per metre length of pipeline

- max. 20 % of the investment costs and altogether 5 Million € per project

- amendment by EnLAG: also costs for the house lateral is eligible (until now problematical)

- cap to altogether 150 Million € per year

- for exceedance only support of grids, which have been especially notified