EEG Subsidy Calculation Explained
Germany's Renewable Energy Sources Act (EEG) provides financial support for renewable energy projects. This guide breaks down how we calculate the EEG subsidy for different solar and battery storage setups within our model, reflecting the logic embedded in our calculation engine.
Core Subsidy Concepts
The EEG offers a couple of ways for renewable energy producers to get paid. The method used generally depends on the size of the system.
1. Market Premium Model (For systems > 100 kW)
This is the default for larger installations. Instead of a simple fixed payment, you get two streams of income:
- Market Price: Whatever you earn by selling your electricity on the open market (e.g., the day-ahead spot market).
- Market Premium: An additional top-up from the government. It's calculated as the difference between a pre-defined EEG Reference Value and the monthly average market value for solar power.
Total Compensation = Market Price + Market Premium
Essentially, the Market Premium ensures your total earnings reach the target EEG Reference Value. If the market price is high, the premium is low, and vice-versa. The reference value itself is set either through competitive auctions (for systems > 1 MW) or by law.
2. Fixed Feed-in Tariff (For systems ≤ 100 kW)
This is a simpler model for smaller systems. You feed your power into the grid and receive a straightforward, fixed rate for every kilowatt-hour (kWh) you deliver.
How Our Model Calculates the Subsidy
Our model focuses on the Market Premium Model, as it applies to the commercial-scale assets we typically analyze. The calculation is performed for each 15-minute interval, taking into account the asset type and how it's connected to the grid.
A key piece of data we use is the monthly weighted average solar price. This value is based on data from Netztransparenz for the backtest (historical) estimates and for the long term forecast pathways is estimated based on the day ahead and solar generation prices. It represents the average market value of solar energy for a given month.
The fundamental subsidy formula applied in our model is:
Subsidy = Eligible Energy * max(0, EEG Reference Price - Monthly Weighted Solar Price)
Crucially, the subsidy is only calculated for intervals where the day-ahead market price is positive. If the market price is zero or negative, we assume that no EEG subsidy is paid for that period.
Eligibility and Asset-Specific Logic
Not all energy is eligible for the subsidy. The model carefully distinguishes between different scenarios based on asset type and configuration.
| Setup Type | Subsidy Eligibility | How It's Calculated in Our Model |
|---|---|---|
| Standalone BESS | ❌ Not Eligible | The model skips any EEG calculation for battery-only assets. The EEG is designed to support renewable generation. |
| PV-Only or PV + BESS (Behind-the-Meter) | ✅ Eligible | For these setups, any power exported to the grid is considered eligible. The model tracks all energy sold to wholesale markets and applies the subsidy formula to that volume. |
| PV + BESS (Front-of-the-Meter) | ✅ Eligible, but with a catch | This is the most complex case. Only the energy that originates from the PV panels is eligible for the subsidy, even if it's first stored in the battery and sold to the grid later. The model calculates the total available PV generation (minus any curtailment and accounting for efficiency losses) in each interval. This amount becomes the maximum volume eligible for a subsidy in that period. If the asset sells more power than what the PV generated (i.e., by discharging previously stored grid power), that extra portion does not receive a subsidy. |
By implementing this detailed, case-by-case logic, our model provides a precise and realistic calculation of EEG subsidy revenues, reflecting the specific operational strategy and physical constraints of each asset.