FACTBOX-German coalition agrees on energy reforms

Wed Nov 27, 2013 2:54pm GMT

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Nov 27 (Reuters) - German Chancellor Angela Merkel's conservatives agreed a coalition deal with the centre-left Social Democrats (on Wednesday, including a raft of energy policies that will be among the new government's priorities.

Europe's biggest economy is in the midst of shifting away from fossil fuels and nuclear energy and embracing green energy sources.

Below are details of energy policies outlined in the deal:

RENEWABLE POWER TARGETS

* Power generated from renewable sources will be increased to 40-45 percent of total production by 2025 and to 55-60 percent by 2035. The ranges will be set in law. They effectively introduce limits on green power, whereas previously only minimum goals were fixed.

* They compare with the current level of 25 percent and the government's previous targets of at least 35 percent by 2020 and at least 50 percent by 2030.

RENEWABLE ENERGY LAW REFORM

* The coalition will amend Germany's renewable energy law (EEG), which outlines the level of incentives offered to green power producers and costs consumers about 20 billion euros ($27.1 billion) via a surcharge on their electricity bills. The government wants to make Germany's transition to renewable energy more affordable and aims to have the law passed by the summer of 2014.

RENEWABLE ENERGY SUPPORT PAYMENTS

* Feed-in tariffs, the higher price paid by consumers for renewable energy, will be cut for new onshore wind power units in many regions where production is high.

* Tariffs supporting photovoltaic power will be unchanged. The government has already put a solar cap of 52 gigawatts (GW) in place, above which there will no longer be any support payments. Solar capacity is already at around 35 GW.

* For offshore wind, the target of installing 10 GW by 2020 has been scaled back to a more realistic 6.5 GW. A degression model that enables operators to get financial help quicker in the early years of a park's development will be extended until 2019. The goal for 2030 is 15 GW, down from 25 GW.

* Operators of renewable plants will have to market their green energy directly to consumers from 2017, instead of relying on an automatic surcharge to fund the gap between wholesale market prices and the higher tariff.

EXEMPTIONS FOR INDUSTRY

* The government will review special breaks enjoyed by some 2,300 companies that do not have to pay renewable energy surcharges.

ENERGY SAVINGS/EFFICIENCY

* Reducing power consumption will be a crucial part of Germany's energy transition. The government will support households in buying low-energy appliances and give tax breaks for installing insulation. No targets are stated in the coalition deal.

CAPACITY MARKETS/CONVENTIONAL POWER GENERATION

* To help ensure a reliable supply of power, a capacity-based system, which would benefit fossil-fuel biased energy firms such as E.ON and RWE, will be developed in the medium term.

NETWORK EXPANSION

* The parties agreed that new transmission lines are needed to bring power from remote areas to centres of consumption and said resistance from local residents must be overcome. They said the grid also needs to be modernised.

CO2 EMISSIONS TARGETS

* Germany wants to reduce its CO2 emissions by at least 40 percent from 1990 levels.

CARBON TRADING

* The deal signals that Germany could support EU plans to withhold some CO2 certificates to prop up carbon prices but states that any such measures must be a one-off intervention.

FRACKING

* The parties agreed to a moratorium on shale gas fracking due to safety concerns.

($1 = 0.7374 euros) (Reporting by Madeline Chambers; editing by Jane Baird)

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