Germany: Mandatory special charge for open space photovoltaic systems in Brandenburg

On 25 January 2024, the state parliament of Brandenburg decided to introduce a mandatory special charge for open space photovoltaic systems to be applicable from 2025. This will result in considerable additional costs in the future for plant operators when constructing such plants in Brandenburg.

In doing so, the state government is continuing its previous course, having already introduced a special charge for wind energy (on a much smaller scale) in 2019. Brandenburg is also one of the few federal states that does not make use of the option to promote open space PV systems in deprived areas, making the expansion of renewable energies increasingly unattractive in what was once a pioneering federal state.

Our experts from the fields of energy law and public law will now take a detailed look at the Open Space Photovoltaic Systems Charge Act (PV Charge Act for short):

What does the new PV Charge Act regulate?

The PV Charge Act applies to open space PV systems over 1 MW in size and obliges system operators to pay EUR 2,000 per megawatt and per year to the local municipality. The special charge must also be paid in full for the year of commissioning and decommissioning. An initial inaccuracy with regard to the wording of the law may already result from the use of the term megawatts, as a distinction is usually made between MW and MWp in the case of open space PV systems.

In addition, the current version of the PV Charge Act does not differentiate between the type of open space used, meaning that this also includes special PV systems within the meaning of Section 37 (1) no. 1 Renewable Energy Act (EEG) (e.g. agri-PV systems). The same applies to the type of commercialisation; accordingly, the PV Charge Act applies to both EEG and power purchase agreement systems.

When is an installation operator obliged to pay the special charge?

To determine which open space PV systems are affected by the special charge for the first time, the PV Charge Act is based exclusively on the date of commissioning. Accordingly, all installations that are commissioned after 31 December 2024 are affected.

It is irrelevant whether the system was approved before the PV Charge Act came into force, whether it was awarded a contract in an EEG tender or whether a delay in commissioning is due to events beyond the control of the system operators. The law also does not provide for any exceptions or a prioritisation between payments already agreed in accordance with Section 6 EEG. In case of doubt, it can be assumed that both payments apply in parallel. In contrast to Section 6 (5) EEG, however, the special charge is not subject to reimbursement by the grid operator as part of the final settlement.

The temporal scope of application is associated with considerable legal uncertainty, as the PV Charge Act does not define the term “commissioning” or the term “installation” in more detail or refer to the definitions in the EEG. Particularly with regard to commissioning, however, it can make a decisive difference whether a connection to the grid is required or not. Differences also arise when applying the so-called narrow definition of an installation with an installation grouping within the meaning of the EEG (Sections 3 No. 30, 24 EEG) or the broad definition of an installation coined by the Federal Court of Justice (decision dated 4 November 2015 - VIII ZR 244/14).
Without clarification of these practical issues, it remains unclear, for example, what will happen if part of a larger overall installation system goes into operation before 1 January 2025, but another part only after that date.

What is the background to the PV Charge Act?

According to the explanatory memorandum to the new PV Charge Act, the energy policy goals of the state of Brandenburg are increasingly being called into question locally with regard to the expansion of renewable energies. With the PV Charge Act, the legislator therefore aims to gain greater acceptance for the expansion of renewable energies. In doing so, the legislator is also focussing on the fact that payments in accordance with Section 6 EEG are voluntary and are declining for non-EEG installations, meaning that an obligation is needed to ensure financial participation for the affected municipalities. Our experience in practice only partially reflects this picture. In particular, we see a high level of willingness on the part of the plant operators in relation to the municipalities to involve them in accordance with Section 6 EEG (irrespective of the marketing form). In our opinion, a greater problem with acceptance results from the fact that the municipality must always make advance payments in accordance with Section 6 (4) sentence 1 no. 2 EEG, as corresponding contracts may only be concluded after the resolution on the statutes for the land-use plan. An additional problem is the grid fee paradox, as regions with a lot of renewable energy are exposed to ever higher grid fees and are thus “penalised” for the expansion that was actually intended.

What are the practical implications of the PV Charge Act?

The PV Charge Act means that the construction of PV systems in Brandenburg will become more expensive. For a plant with 50 MW, for example, this results in an additional amount of EUR 2.5 million over 25 years. Plant operators of projects that are already planned or under construction must factor these additional costs into their profitability calculations. The financing bank will do the same and may demand additional equity from the plant operators. In the worst-case scenario, the project could even be cancelled if it is no longer economically viable due to the special charge.

Due to the high financial burden of the special charge, municipalities will hardly be able to participate in accordance with Section 6 EEG and landowners may only be offered a lower lease for the area of the PV system in future.

For contracts already concluded with the municipality or with property owners, the question arises as to the extent to which such events are covered by the contract or at least open up scope for renegotiation.

What are the legal objections to the special charge?

In our view, there are certainly general and individual constitutional concerns about the PV Charge Act. In particular, the question arises as to legislative competence, compatibility with the financial constitutional requirements for a special charge and the protection of fundamental rights.

• Legislative competence: The state of Brandenburg bases the law on Section 22b (6) EEG, according to which the federal states can enact more extensive provisions on citizen participation and increasing acceptance for the construction of plants. In principle, the Federal Constitutional Court - in its decision on the Municipal Participation Act in Mecklenburg-Vorpommern - assumes that this also covers the introduction of corresponding special levies (Federal Constitutional Court, decision dated 23 March 2022 - 1 BvR 1187.17). In this respect, the state government of Mecklenburg-Vorpommern succeeded in using representative surveys at both state and federal level to make it plausible that the special charge would actually lead to an increase in acceptance.
  No corresponding surveys were carried out in Brandenburg, nor are the charge amount or the calculation arithmetic the same as in Mecklenburg-Vorpommern. Furthermore, the question arises as to whether any level of charge can still be included in order to increase acceptance or whether there are limits to the legislative powers under Section 22b (6) EEG.

• Special charge: One of the general prerequisites for the levying of a special charge is that the group in question has a special financing responsibility for the purpose of the special charge and that the funds collected are used for the benefit of the group and in line with this special financing task. In our view, it is at least questionable whether these requirements are really met in the case of the earmarking stipulated in section 4 of the PV Charge Act, in particular with regard to the enhancement of the townscape and local structures or the use of the funds in urban land-use planning (independent of the project). Surprisingly, the Federal Constitutional Court did not address the financial constitutional concerns in the case of Mecklenburg-Vorpommern.
• Safeguarding fundamental rights: Ultimately, there are doubts as to whether the law safeguards the fundamental rights of plant operators (in particular Articles 12 and 14 of the German Constitution) in every case. This applies in particular to constellations in which the operator has already obtained a specific legal position by obtaining planning permission or has already contributed to local acceptance by concluding municipal contracts for participation in accordance with Section 6 EEG. In this respect, the Municipal Participation Act in Mecklenburg-Vorpommern does not, for example, link the transitional periods to commissioning, but rather to the granting of authorisation.

  Fundamental rights could also be violated if the level of the charge ultimately completely devalues the project due to a lack of economic viability at an advanced planning or realisation stage. In our opinion, the complete burden in the year of commissioning and decommissioning as well as in years with a considerable shortfall are also legally questionable. It is true that in the case of the Municipal Participation Act in Mecklenburg-Vorpommern, the Federal Constitutional Court considered the encroachment on the freedom of occupation in accordance with Article 12 of the German Constitution to be justified, as the legislator was equally obliged to protect the fundamental rights of its citizens from the adverse effects of climate change, including through the expansion of renewable energy. However, there were neither consequences that jeopardised the existence of the company nor questions of retroactivity. In cases where livelihoods are jeopardised, the argument of “promoting climate protection” would even be reversed, as less renewable energy would actually be produced. The lack of hardship regulations and sufficient transitional provisions therefore certainly calls into question the constitutional legitimacy in individual cases.

Is it possible to take legal action against the law or the payment of the special contribution?

Those affected have two options for legal action against the special charge: Firstly, they can lodge a constitutional complaint with the Federal Constitutional Court directly against the law or, as soon as they are required to pay the special charge, they can lodge an objection and appeal against the official charge notice.