Energy & Infrastructure

Amendment to the Renewable Energy Sources Act – Property Owners Obliged to Tolerate Certain Measures to Aid the Expansion of Renewable Energies

With the bill to amend the Renewable Energies Sources Act (Erneuerbare-Energien-Gesetz, “EEG”), the German Federal Government aims to further accelerate the expansion of renewable energies by requiring parties with property ownership or land use rights to tolerate certain measures. In future, property owners and land users will be obliged to allow for cabling and grid infrastructure connecting renewable electricity generation installations to the electricity grid to be installed and operated on their property. During the construction and dismantling phases of onshore wind energy installations, they will also be required to tolerate installations to be swung over the property as well as the siting of ways of access across the property for transporting the installations. The bill provides for compensation in each case.

Background to the cabling and passage rights

The EEG envisages a shift to an electricity supply that is greenhouse-gas neutral. Electricity from renewable energies is to make up at least 80% of gross electricity consumption by 2030 (section 1(2) EEG). This requires a much faster expansion of renewable energies – regarded as being in the prevailing public interest (section 2 EEG) – and a quicker connection rate for renewable energy installations (“EEG installations”).

The construction of new EEG installations has been delayed and become more expensive lately. Project developers and EEG installation operators have indicated that it can be difficult to reach agreement with property owners whose property is needed for cabling or transport measures. The amendment aims to remedy this situation for installation operators by requiring property owners to tolerate certain measures. In return, installation operators are to pay a fixed amount of compensation for the loss of a land use opportunity to property owners.

Parties with rights of use of a property are to be treated the same as property owners, i.e. leaseholders, holders of a limited personal easement and others with rights to use and benefit from a property must also tolerate the measures.

Obligations of property owners to tolerate cabling wiring and grid connection infrastructure

The “right to lay cabling”, granted to the cabling operator in section 11a Amendment to the Renewable Energies Sources Act (EEG-Novelle, “E-EEG”), obliges property owners to tolerate certain measures. An operator of cabling for connection of an EEG installation with more than 30 kW installed capacity is entitled to enter and access a property to lay, construct, maintain, repair, protect and operate the cabling. According to the bill, cabling includes not only power cables but also control and communication cabling. Technical installations required to connect EEG installations, i.e. in particular transformers, must also be tolerated.

The right holder is the entity that operates the cabling; this may or may not be the same party as the EEG installation operator. In practice, connection cables are installed and operated either by the connection grid operator – enabling it to expand its grid – or by the EEG installation operator itself. Where a number of EEG installations of different operators are to be connected to the grid, an infrastructure company is sometimes created to handle the connection; in these cases, the infrastructure company would be the right holder under section 11a E-EEG.

The bill also ensures that cabling does not become an essential part of the property (as defined in section 94(1) Civil Code (Bürgerliches Gesetzbuch)), meaning that the cables remain the property of the cabling operator (section 11a(1), E-EEG).

The property owner must refrain from all measures that endanger or adversely affect the existence or operation of the cabling (section 11a(3), sentence 1 E-EEG). This includes not building on or introducing deep-rooted plants to the protected strip. The width of the strip depends on the type of cabling laid. Once cabling has been installed, the property owner can only require the cabling operator to relocate it if its location is unreasonable for the property owner. The cabling operator is responsible for the costs of the relocation (section 11a(3), sentences 2, 3 E-EEG).

The operator must notify the property owner immediately if the cabling is taken out of service permanently. The property owner must then tolerate the cabling and other installations for another 48 months (section 11a(4) E-EEG), unless it cannot reasonably be expected to do so.

Obligations of property owners in respect of wind energy installations

The bill also introduces obligations for property owners and users regarding the construction and dismantling of wind energy installations: property owners must tolerate installations being swung over their property as well as passage of such installations across their property (section 11b(1), sentence 1 E-EEG). They must also allow improvements to be made to the property prior to passage, which is defined as including any logistical operations during transport, e.g. entry, reloading and transportation-related interim storage. Once passage is no longer required, the operator must immediately restore the property to its original condition at the operator’s own expense (section 11b (1), sentence 4 E-EEG).

Special cases, exemptions and compensation

The two obligations above do not apply in every single case (sections 11a(1), sentence 3, 11b(1), sentence 3 E-EEG). There is no obligation to tolerate such measures when doing so would unreasonably impair the use of the property. The bill also exempts properties used for national or Alliance defence purposes, including those used to meet international obligations. In practice, interpreting the provisions to establish whether impairment is unreasonable will be difficult, and disputes may arise between property owners and the operators of EEG installations or cabling infrastructure.

When property owners and operators are in dispute, injunctions (as defined in section 83(2) EEG) will be used to enforce operator rights. But this does not relieve operators of their duty to obtain approvals required under other provisions (sections 11a(5), 11b(3) E-EEG, such as requests to Germany’s motorway agency (Autobahn GmbH) to permit the transports).

To compensate property owners for their obligation to tolerate cable-laying, operators must pay property owners 5% of the market value of the protected strip along the cable route (section 11a(2), sentence 1 E-EEG). Making the market value the basis of the calculation is also intended to incentivise cable operators to use low-value properties for cables rather than building land. The bill also stipulates compensation for tolerating the passage of wind energy installations across a property (section 11b(2), sentence 1, 2 E-EEG); payment must be made to any party that was directly restricted in its use of the property. Compensation is set at EUR 28 per month and hectare affected. Property owners do not have a right to compensation if installations are merely swung over their property. Where property owners tolerate such measures, they will – notwithstanding any compensation – still be entitled to any claims for damages that arise. These claims could include, for example, damage caused by laying cables or the passage of installations across the property (sections 11a(2), sentence 2, 11b(2), sentence 3 E-EEG).

Summary and outlook

The obligations placed on property owners by the E-EEG are a further element in accelerating the expansion of renewable energy installations. The current draft is complex, however, and will likely be subject to discussion and amendments during the parliamentary process. The regulatory notion of an “obligation to tolerate” is not alien to German law in principle and can already be found, for example, in regulations governing the expansion of electricity cabling and broadband (section 12 Ordinance on the General Terms and Conditions for Connection to the Grid and its Use for the Supply of Electricity (Verordnung über Allgemeine Bedingungen für den Netzanschluss und dessen Nutzung für die Elektrizitätsversorgung in Niederspannung); section 134 Telecommunications Act (Telekommunikationsgesetz)). Should this approach be widely accepted, there may well be changes particularly in connection with the provisions on compensation. In practice, the use of property for cabling and passage is often a matter of price. As the draft currently stands, however, the level of compensation would no longer be a matter of negotiation, but would follow directly from the law. It should be noted that there is no compensation for swinging over property, that compensation for passage requires a party with rights of use of the property to be directly restricted in its use, and that the singular compensation amount of 5% for the construction and operation of cabling is significantly below the current market price. On the other hand, any evaluation of the level of compensation should take into account that the proposed statutory obligation on the property owner to tolerate the measures would mean that the property would no longer have to be encumbered with an easement.