The European Commission (EC) has found that Germany’s plans to support renewables through auctions are in line with EU state aid rules.
Germany introduced amendments to its clean energy bill in July this year, in order to generalize the use of tenders to support projects.
As of next January, subsidies will mainly be granted via competitive tenders.
The commission said the move will promote the steady deployment of renewable energy whilst maintaining competition in the German energy market.
At present, auctions are used in a pilot phase for ground-based solar installations. From next year, the auctions will be organised to include offshore wind installations, onshore wind farms above 750kW, solar installations above 750kW and biomass and biogas installations above 150kW.
The commission noted that in Germany specific auctions for each technology can ensure more cost-efficient result than bidding processes where several technologies compete.
Rapid deployment of renewable energy along with the closure of nuclear plants has resulted in grid instability and integration issues in the German electricity market. Germany expects that this issue can be addressed by using the method of auctions for separate technology.
The commission noted that there can be effective implementation, only when the auctions for offshore wind, onshore wind and solar energy are kept separate.
Apart from renewable energy auctions, Germany has also committed to test alternative designs where auctions can incorporate grid integration costs, tender for specific electricity quality.
European Commissioner for Competition Margrethe Vestager said: "Competitive bidding processes support the deployment of renewable energy whilst keeping electricity costs at bay for consumers. The amendments to the German EEG law we approved today make sure that one of the largest renewable support schemes in the EU will be based on auctions.
“The decision allows Germany to organise separate auctions for different renewable energy technologies to keep its electricity grid stable, and commits Germany to test alternative auction designs for the future through pilot projects."