Austria is a federal state (Bund) with certain legislative competences retained by the federal legislator, and others delegated to the nine states (Länder), which comprise Burgenland, Carinthia (Kärnten), Lower Austria (Niederösterreich), Salzburg, Styria (Steiermark), Tyrol (Tirol), Upper Austria (Oberösterreich), Vienna (Wien) and Vorarlberg.
The principal law governing the ownership and structure of the power industry is the federal state-level Electricity Management and Organisation Act (Elektrizitätswirtschafts- und -organisationsgesetz 2010, or ElWOG 2010).
The ElWOG implements the third energy package of the EU, which is designed to liberalise the electricity markets of individual EU member states. The ElWOG sets out provisions on the operation of electricity networks; the rights and obligations of network operators, specifically third-party network access; the unbundling of transmission system operators; the operation of transmission networks and the conditions for concessions to operate distribution networks; and the determination of system usage tariffs.
While the ElWOG is a federal act, some of the ElWOG provisions delegate authority to the state parliaments to enact state-specific legislation regarding certain aspects of the electricity sector. The main state-level acts are:
As there are certain state-specific variations, for simplicity this chapter focuses in particular on the state of Lower Austria as one of the most populous states and one of the most relevant from an electricity infrastructure perspective. In Lower Austria, therefore, both the ElWOG and the Lower Austrian Electricity Act 2005 (Niederösterreichisches Elektrizitätswesengesetz 2005, or NÖEWG) apply.
The Federal Constitutional Law that regulates ownership in Austrian Electricity Market Companies (Bundesverfassungsgesetz, mit dem die Eigentumsverhältnisse an den Unternehmen der österreichischen Elektrizitätswirtschaft geregelt werden, or the Constitutional Law on Ownership) sets out the minimum state ownership of listed energy companies. This adopts provisions from the second Electricity Market Nationalisation Law (Bundesgesetzes über die Verstaatlichung der Elektrizitätswirtschaft), which originated in 1947 as a basic law with non-constitutional status. As such, these nationalisation provisions are afforded constitutional status.
Annex 1 of the Constitutional Law on Ownership sets out that the following companies must be at least 51% in the ownership of either the federal state or Austria's biggest electricity provider, Verbund:
Annex 2 of the Constitutional Law on Ownership sets out that the following companies must be at least 50% in the ownership of either the federal state or Verbund AG:
Annex 3 of the Constitutional Law on Ownership sets out that the following state companies (Landesgesellschaften) must be at least 51% in the ownership of one of the nine relevant states or an entity that is at least 51% in the ownership of one of the nine relevant states:
The main generation companies in Austria are Verbund AG (51% state-owned), EVN AG (51% owned by the state of Lower Austria) and Wien Energie GmbH (indirectly owned by the City of Vienna).
The main transmission system operator in Austria is Austrian Power Grid AG (APG), which is responsible for the transmission system across eight of the nine Austrian states. APG is a 100% subsidiary of Verbund AG; however, APG is functionally unbundled from Verbund as an independent transmission system operator (ITO). Key requirements of this unbundling are the complete separation of the personnel, information technology and communication sectors, a ban on shared services and the strict regulation of the relationship of APG management with respect to Verbund AG.
The transmission system in the western-most state, Vorarlberg, is operated by Vorarlberger Übertragungsnetz GmbH (indirectly owned by the state of Vorarlberg).
The main distribution system operators in Austria are the provincial electricity companies – eg, Wiener Netze, Netz Niederösterreich, Netz Oberösterreich, Netz Burgenland, Salzburg Netz and Energienetze Steiermark – which are mostly directly or indirectly owned by the respective states.
There are over 100 suppliers in Austria. The main suppliers include Verbund AG (as above, 51% state-owned) and individual state companies, which are constitutionally at least 51% owned by local authorities or companies in which local authorities hold at least 51% ownership (see 1.1 Principal Laws Governing the Structure and Ownership of the Power Industry).
The control of the acquisition of certain shareholdings in Austrian companies, which are considered as being of general interest and of interest to the defence goods industry, has been imposed by the Foreign Investment Screening Act (Investitionskontrollgesetz). The Foreign Investment Screening Act was passed in order to fulfil the requirements set out in the EU Foreign Investment Screening Regulation (Regulation (EU) 2019/452) which entered into force on 11 October 2020 and replaced the provisions of the Foreign Trade Act (Außenwirtschaftsgesetz 2011). As the energy sector is deemed as being of general interest, any potential acquisitions that fall within the scope of the Act require the approval of the Federal Ministry of Digital and Economic Affairs (Bundesministerium Digitalisierung und Wirtschaftsstandort).
Authorisation is required if a foreign direct investment is made by an individual who is not a citizen of an EU member state, an EEA state or Switzerland, or is a company with its seat in a country outside the EU, EEA or Switzerland. Foreign direct investment according to the Foreign Investment Screening Act is defined as the direct or indirect acquisition of:
The acquisition of 10% or more of the voting rights in the target is only relevant in sensitive areas, such as operating critical energy infrastructure. The Foreign Investment Screening Act obliges not only the acquirer of a company but also the company itself to report changes in its ownership structure. However, authorisation is not required for foreign direct investments where the target is a micro-enterprise, including start-up companies, with fewer than ten employees and annual sales or an annual balance sheet total of less than EUR2 million.
Except those of the Foreign Investment Screening Act, there are no specific restrictions regarding the sale of power industry assets or businesses, or other transactions such as amalgamations and mergers. In Austria, the commercial law (Unternehmensgesetzbuch, or UGB), the civil code (Allgemeines bürgerliches Gesetzbuch, or ABGB), the Limited Liability Company Act (Gesetz über Gesellschaften mit beschränkter Haftung, or GmbHG) and the Stock Corporation Act (Aktiengesetz, or AktG) govern the establishment of companies, as well as the process of mergers and acquisitions.
In addition, every business operating in Austria is bound by competition rules in the exercise of their economic activity. On the one hand, these arise directly from European Competition Law (Articles 101 and 102 of the Treaty on the Functioning of the European Union, or TFEU) and on the other hand from domestic legislation, in particular the Cartel Act (Kartellgesetz 2005, or KartG) and the Competition Act (Wettbewerbsgesetz, or WettG). To prevent a concentrated market structure from leading to a reduction in competition, anticipatory control is provided for mergers based on their turnover. Mergers that exceed specified turnover thresholds must register with the relevant competition authority (either the EU Commission in cases with EU relevance or the Federal Competition Authority for Austrian matters).
The main regulatory authority for the electricity sector is Energie Control Austria (E-Control), established by the Energie Control Act (Energie-Control-Gesetz 2010). E-Control is a public law institution with its own legal personality.
The main aims of E-Control are:
In June 2019, the EU co-legislator passed the final acts of the Clean Energy for All Europeans package. This is designed to develop the Third Energy Package for electricity to cover the period from 2021 until 2030. The acts are:
The transposition deadline for many of the provisions of these directives is 31 December 2020. In the context of the electricity markets, it is anticipated that the ElWOG will be used to implement the updated electricity directive. In turn, the nine individual states will be expected to implement their relevant delegated provisions.
The current Austrian government is composed of a coalition between the conservative Austrian People's Party (Österreichische Volkspartei) and the Green Party (die Grünen), which was sworn in on 7 January 2020. Led by Chancellor Sebastian Kurz, the government has focused on tackling climate change.
A new policy agenda was presented on 2 January 2020 that has committed Austria to achieve carbon neutrality by 2040 and source 100% of Austria's total national electricity consumption from renewable sources by 2030, with plans for photovoltaic (PV) generation capacity to hit 11 TWh by that year. This policy includes the aim of installing solar panels on one million Austrian homes. On 11 March 2021, the Austrian Minister for Environment Leonore Gewessler and Vice Chancellor Werner Kogler presented the Renewable Expansion Act (Erneuerbaren-Ausbau-Gesetz).
Austria has generally been progressive in promoting the development of renewable energy generation, the use of biofuels and e-mobility, and has one of the highest renewable percentages in the gross final consumption of energy within the EU.
In Austria, currently more than 70% of electricity generated originates from renewable sources. Due to its topographic location, water (both run-of-the-river and pumped storage) and wind are the two main renewable energy sources in Austria.
Historically, Austria has not directly relied on nuclear power. In 1978, shortly after the completion of construction of the first Austrian nuclear power plant in Zwentendorf an der Donau in Lower Austria, a referendum initiated by then-Chancellor Bruno Kreisky on the use of nuclear power was held. This was the first national referendum in the Austrian Second Republic. With an outcome of 50.5% against the use of nuclear power, the Zwentendorf power plant never became operational. Subsequently, the prohibition of nuclear power generation in Austria was enacted into law in 1978, and as of 1999 this prohibition was given constitutional status.
Nevertheless, there are a number of nuclear power plants located close to Austria’s borders, such as Temelín in the Czech Republic, which is 60 km from the border. As such, despite its anti-nuclear standpoint, through the import of electricity from other EU member states, Austria does consume electricity from nuclear power.
From the 1990s until 1 October 2018, Austria and Germany shared a single electricity market with a common price zone, whereby electricity was traded freely between the two countries.
In an effort to ease grid congestion caused by poor interconnectedness between the two countries, as of 1 October 2018, an upper limit of 4,900 MW was placed on the amount of electricity that could be traded between Austria and Germany. This, however, prevented the physical delivery of power being traded and caused surges of electricity destined for Bavaria and Austria, through neighbouring countries such as the Czech Republic and Poland. A complaint was lodged with the Agency for the Cooperation of Energy Regulators (ACER), which, in its binding decision in 2016, decided that the common price zone be split.
As Austria depends on electricity imports from Germany, Austrian wholesale electricity prices have increased as a result of this decision. Germany is currently promoting the development of further north-south electricity interconnectors that should alleviate the grid congestion. The construction of these will, however, likely take a number of years.
Austria’s electricity market is based on a balancing group model, whereby suppliers and customers are consolidated into a number of virtual groups in which the supply and demand are balanced. Each market participant is obliged to be a member of a balancing group.
Each market participant therefore delivers or removes energy from its respective balance group, so that the compensation for generation and demand fluctuates for each individual group. Each group is also obliged to balance energy consumption and generation. If unforeseen fluctuations in production or demand occur, the energy balance in the grid must be regulated by switching generating units on the grid on or off. The cost of these compensatory measures is offset against the balance group that caused the respective deviation. The deviations and the offsetting are calculated by an independent balance group co-ordinator.
Wholesale trading is mainly conducted through bilateral contracts between suppliers and producers over the counter (OTC). However, trading also occurs via the Austrian power exchange EXAA.
Imports and exports of electricity to and from other jurisdictions are permitted, and Austria is highly dependent on the importation of electricity.
As part of the EU, the Austrian electricity market is subject to EU laws on the internal energy market that enforce the principle of free movement of electricity across the EU. In addition to Directive 2009/72/EC (to be recast as Directive (EU) 2019/944), as implemented in the ElWOG and state laws), and Regulation (EC) 714/2009 governing cross-border trade in electricity (to be recast as Regulation (EU) 2019/943), subsidiary network codes include:
The Austrian supply mix in 2018 was as follows.
Subject to 1.4 Principal Laws Governing the Sale of Power Industry Assets, there are no concentration limits in Austria.
In accordance with the Competition Act, the Federal Competition Authority (Bundeswettbewerbsbehörde) is responsible for ensuring effective competition and for responding to distortions or restrictions of competition within the meaning of the Cartel Act, or European competition rules in individual cases, and for ensuring compatibility with EU law.
The Federal Competition Authority must work towards compatibility with the decisions of E-Control as regulator when applying antitrust law and it is empowered to provide E-Control with the information required for the performance of its duties in accordance with the principles of data protection. The Federal Competition Authority may also request E-Control to provide information and opinions, and, for this purpose, to bring all the information to the attention of the parties and to provide any documentation that they need.
Without prejudice to the competence of the Federal Competition Authority, for the duration of the proceedings E-Control is entitled to provisionally prohibit the performance of the relevant activity by the party under investigation.
The Regulation on Energy Market Integrity and Transparency (Regulation (EU) No 1227/2011, or REMIT) sets out the monitoring of wholesale energy trading in Europe, and prohibits insider trading and market manipulation. E-Control is responsible for collecting data from Austrian market participants and for national monitoring compliance with REMIT.
The main climate change laws or policies for Austria are:
In April 2020, the Austrian power provider Verbund shut down its last coal-fired district heating plant as planned. Legislation related to the construction of generation facilities, detailed in 4.1 Principal Laws Governing the Construction and Operation of Generation Facilities, generally covers the conditions and process of retiring power plants.
In July 2011 the amended Green Electricity Act 2012 (Ökostromgesetz 2012, or ÖSG) was enacted, implementing Directive 2009/28/EC on the promotion of energy from renewable sources.
The ÖSG provides for the purchase of electricity from renewable energy sources at fixed feed-in tariffs. Payment to participating generators is provided by the Clearing and Settlement Agency (Ökostromabwicklungsstelle, or ÖMAG), which is obligated to contract with eligible new generators provided that the statutory funding (EUR50 million per annum) has not been exhausted. This is granted to applicants on a first-come, first-served principle.
Renewable source electricity plants that receive a contract with ÖMAG supply electricity at the feed-in tariffs specified in the Green Electricity Order (Ökostromverordnung). The duration of the tariff period is 15 years for plants dependent on raw materials such as biomass or biogas, and 13 years for other technologies (eg, photovoltaic and wind power). The feed-in tariffs are specified in the Green Electricity Feed-In Tariff Order (Ökostrom-Einspeisetarifverordnung).
The funds are mainly raised via a green electricity flat rate and green electricity subsidy. The green electricity flat rate is a lump sum levied from all end-consumers connected to the national grid. The green electricity subsidy, set annually by the Federal Ministry for Climate Action, Environment, Energy, Mobility, Innovation and Technology, is collected from all end-consumers proportionate to their respective network usage and network loss charges paid.
The principal laws governing the construction and operation of generation facilities are:
The regulatory process and the factors that are taken into account in the decision to approve a generation project differ according to the type of generation facility, the impact on the environment, and also the state in which authorisation is to be obtained.
The NÖEWG provides for two procedures:
Under the simplified procedure, provided the application is complete, details of the project will be made public by posting a notice at the local community council and by submitting the project documentation to the municipality during a specified period. During this period, qualified neighbours can submit justified objections. The authority investigates by obtaining expert opinions and determining whether the conditions allow for approval. If necessary, approval is issued by a formal decision. Specific orders relating to the construction and operation of the plant may be issued.
For a regular procedure, a formal oral hearing is scheduled after the application has been deemed complete. The subject matter, time and place of the hearing are announced on the official noticeboard of the local community council, and, where appropriate, on the official noticeboard of neighbouring municipalities. Qualifying neighbouring landowners near the site of the prospective power generation plant are personally informed. The authority makes its investigations by obtaining expert opinions to determine whether the conditions allow for approval. If necessary, the approval is issued by a formal decision. Specific orders relating to the construction and operation of the plant may be issued.
Annex 1 of the UVPG lists 89 types of projects deemed to have significant environmental impact, for which an environmental impact assessment is required. Regarding energy generation, this applies to a number of projects, including hydropower plants, thermal power plants with a minimum fuel heat output of 200 MW or overhead power lines with a rated voltage of at least 220 kV and a length of at least 15 km.
Pursuant to Annex 1, certain projects are subject to a simplified assessment procedure, including wind turbines with a total electrical output of at least 30 MW. A third class of projects is subject to the fulfilment of specific conditions, an investigation done on a case-by-case basis, and, where required, the project may be subject to a simplified assessment procedure.
If the project requires an environmental impact assessment, in addition to the above, the applicant must submit an environmental impact statement with the application. It must describe the project, the main alternatives reviewed, the environmental impact of the project and the measures designed to prevent or mitigate the impact. The public is greatly involved in this procedure, and the assessment of the potential impact on the environment will be carried out by experts from a wide variety of disciplines, as appointed by the authority. These experts will be required to jointly prepare a comprehensive environmental impact report.
Generation plants must be constructed, modified and operated in a manner that conforms with water protection regulations. State-of-the-art technology must be used to construct and operate the plant, as well as to store equipment or other materials. This is to ensure that the life or health of the plant operator, the state of neighbouring properties and other property rights are not endangered. Furthermore, neighbours must be protected against unreasonable levels of noise, smell, dust, fumes, vibrations and the absence of light (the latter most relevant in the case of wind turbines). The plant must be constructed and operated in an energy-efficient manner and in accordance with the relevant zoning plans.
The implementation of the electricity acts of individual states, including the NÖEWG, permits the expropriation of land under certain conditions.
In Lower Austria, the Lower Austrian Power Lines Act (Niederösterreichisches Starkstromwegegesetz) provides that the public authority shall, upon application of a third party, impose necessary restrictions on rights with respect to the land or other property rights in rem. This includes the expropriation of property for reasonable compensation if the construction of a power plant is in the public interest, if the construction of a production facility is required for technical or economic reasons, and if the project developer and the landowner or party with affected property rights are not able to reach an agreement and no other legal remedy under the Act, apart from expropriation, is available.
Expropriation may include: granting an easement over the affected land; the assignment of ownership rights over the land; or the assignment, restriction or cancellation of other land rights or other rights linked to a specific property.
The construction and decommissioning of generating stations is delegated to the individual states. In Lower Austria, the Lower Austrian Electricity Act sets out that in decommissioning the generating station, the operator must take all necessary precautions to avoid danger or disturbance to the life or health of it and its neighbours or to the property of its neighbours. Furthermore, the operator must take precautions to protect the townscape.
Prior to decommissioning, the operator must notify the local authority and submit planned decommissioning procedures for the authority’s decision. If the procedures are deemed insufficient or if the operator has not taken necessary precautions, the authority must provide these.
The decommissioning of a power plant is additionally provided for as a safety measure. In Lower Austria, for example, the NÖEWG provides that the authority may require the decommissioning of a power plant (either in full or in part) in the case of danger to the life or health of people, damage to property or harm to the other property rights of qualifying neighbours caused by the power plant, or to stop the unreasonable disturbance to neighbours.
Should the authority have reason to believe that such emergency measures are immediately necessary, following agreement with the generating facility operator, it may take such action without undertaking a full administrative procedure.
The principal laws that govern the construction and operation of transmission lines and associated facilities are:
The construction of transmission lines requires a construction and operating licence under the Electric Power Lines Act of the applicable state. For this reason, the licensing authority (the relevant state government) must evaluate the project, in particular the planned route, in consideration of other public interests.
For transmission lines with a rated voltage of at least 220 kV and a length of at least 15 km, as well as transmission lines in protected areas with a rated voltage of at least 110 kV and a length of at least 20 km, an environmental impact assessment is required, as detailed in 4.1 Principal Laws Governing the Construction and Operation of Generation Facilities.
Furthermore, each year the transmission system operators have to submit a ten-year network development plan for the transmission system to the regulatory authority, based on the current situation and supply-and-demand forecasts. The purpose of the network development plan is in particular to provide market participants with information on which key transmission infrastructures need to be built or developed over the next decade, to list all investments that have already been decided, to identify new investments to be made over the next three years, and to set a timetable for all investment projects.
Authorisation of transmission line construction is an administrative act that requires an application containing details of the planned route. Approval for the construction of a transmission line is conditional on its being in the public interest to supply the population with electrical energy. It must connect with other existing or approved energy supply facilities, and must conform with land culture, forestry, spatial planning, nature and monument protection requirements, water management and water law, public transport as well as other public supply infrastructure, national defence, airspace security and employee protection requirements. The authorities appointed to safeguard such interests and the relevant public bodies have the right to make submissions in the preliminary proceedings in so far as they are affected by the transmission line project.
The operation of transmission systems in Austria requires authorisation from E-Control. This requires the fulfilment of conditions set out in the ElWOG, which include, in particular, the mandatory unbundling of entities involved in the activities of generation and supply, as well as compliance with provisions ensuring third-party access to transmission infrastructure, non-discriminatory pricing and conditions of usage.
The terms and conditions imposed on approvals for the construction of transmission facilities are provided in the ElWOG. This sets out that the transmission system operator is committed to meeting the criteria in Section 40 of the ElWOG. These criteria are extensive, and include:
These conditions are in addition to the EU network codes relevant to transmission as listed in 2.2 Imports and Exports of Electricity.
Under certain circumstances, an expropriation may be carried out if the construction of a transmission line is deemed to be in the public interest. The Lower Austria Power Lines Act, for example, sets out that if there are compelling technical reasons for a specific routing in Lower Austria, where relocation would be at a disproportionate cost, the authority may impose the expropriation for transmission lines, including accessories such as substations, transformers and switchgear.
Expropriation may include: the granting of immovable property; the assignment of land rights; or the assignment, restriction or cancellation of other real rights in immovable property and rights, the exercise of which is linked to a specific place.
The quantum of the compensation is determined on the basis of the estimate of at least one sworn and judicially certified expert in the expropriation decision or in a separate decision. In the latter case, a provisional guarantee amount is to be determined without further enquiries in the expropriation decision.
In Austria, property rights are constitutionally protected, which means that expropriation is only permissible for the public good and in line with the proportionality principle.
The ElWOG sets out an area monopoly for transmission services in Austria into three regional areas. The Vorarlberg area is legally covered by Vorarlberger Übertragungsnetz GmbH, and the rest of Austria's nine states are covered by the Austrian Power Grid (APG) AG. Since 2011, APG has taken over operation of the Tyrolean transmission lines and since 2012, Vorarlberger Übertragungsnetz GmbH has been co-operating with APG. As such, APG is the Austrian-wide control area manager.
The provision of transmission services is primarily governed by the ElWOG, whereby E-Control as regulator must determine the tariff according to the system usage charges regulation (Systemnutzungsentgelte-Verordnung). Regarding network access charges, the ElWOG entitles the transmission system operator to charge the costs incurred in the construction, operation and maintenance of the transmission system.
Pursuant to the ElWOG, transmission charges cover the costs incurred by a network operator for the operation and maintenance of the network. The ElWOG implements Directive 2009/72/EC, which sets out the principles of non-discriminatory terms and tariffs for access and usage of the transmission network and of setting pre-approved tariffs. All network users connected to the transmission network are charged a fixed tariff for the transmission of electricity, set by E-Control, dependent on the voltage level.
Under the ElWOG, transmission network operators are obliged to grant network access to those entitled to network access according to the approved general conditions, subject to certain system-user charges. The ElWOG implements Directive 2009/72/EC, which sets out the principle of non-discriminatory third-party access to transmission networks.
A network operator may refuse network access in whole or in part, only in the case of exceptional network conditions, in the case of a lack of network capacity, or if electrical energy from designated combined heat and power plants or from renewable energy installations would otherwise be displaced despite the current market prices, in effect prioritising the sale of this electricity to third parties.
Relevant legislation includes:
The operation of a distribution network requires an electricity concession, which may be granted only if the concessionaire is able to ensure cost-effective, sufficient and secure distribution, and comply with regulatory obligations for the operation of electricity distribution, and provided that no concession has already been granted to operate a distribution network for the specified area.
The granting of the electricity concession also requires that the concessionaire (if this is an individual) should be self-employed, have reached the age of 24, have Austrian citizenship or be a citizen of another EU member state or EEA contracting state, have his or her principal place of residence in Austria or another EU member state or EEA contracting state, and should not be excluded from the exercise of the concession. If the concessionaire is a legal entity or a registered partnership, it should have its seat in Austria or another EU member state or EEA contracting state, and have appointed a manager or tenant for the exercise of the concession. In this case, the competent authority is the federal government.
The relevant legislation and processes for the construction of distribution lines are similar to those for transmission as detailed in 5.1.2 Regulatory Process for Obtaining Approvals to Construct and Operate Transmission Facilities.
The terms and conditions for the construction and operation of distribution networks are set out in the individual implementation acts of the states. In Lower Austria, for example, the Lower Austria Power Lines Act provides that network operators are obliged to:
Expropriation in the scenario of distribution networks is similar to that for transmission systems, as detailed in 5.1.4 Proponent’s Eminent Domain, Condemnation or Expropriation Rights.
As with transmission systems, various area monopolies are set out across Austria. Lists of relevant areas are specified by the individual state laws. For example, the NÖEWG provides that a concession may only be granted if another concession has not already been granted for that particular area. Given these geographical restrictions, end customers cannot select a specific distribution system operation.
As for transmission systems, the provision of distribution services is primarily governed by the ElWOG, whereby E-Control as regulator determines the tariff according to the system usage charges regulation (Systemnutzungsentgelte-Verordnung). Regarding network access charges, the ElWOG entitles the distribution system operator to charge the costs incurred in the construction, operation and maintenance of the distribution system.
As for transmission systems, pursuant to the ElWOG, distribution charges cover the costs incurred by a network operator for the operation and maintenance of the network. Network users connected to the distribution network are charged a fixed tariff for the distribution of electricity, which is set by E-Control and dependent on the voltage level.
Energy Transition on the Fast Track: 100% Renewables by 2030
In 2020, a coalition between the conservative Austrian People's Party (ÖVP) and the Green Party took office in Austria. The Green Party’s programme clearly shapes the current energy and climate policies in the country. Several new legislative acts are currently underway, and these can be seen as "game-changers" in the market.
First and foremost, the proposal for a Renewable Energy Expansion Act (Erneuerbaren Ausbau Gesetz, EAG) is designed to give renewable energy projects a substantive push forward. Being part of a legislative package of ten (energy-related) proposals – of which nine are amending acts – the Renewable Energy Extension Act (hereafter, “REEA proposal”) concerns the main sources of renewable energy in Austria: hydropower, wind power, solar power (photovoltaics), electricity production from biomass and biogas as well as green hydrogen and biogas (ie, "renewable gases"). The REEA sets out climate goals and specific renewable electricity expansion targets, namely:
The expansion of renewable energies is to be promoted with more than EUR1 billion per year. The costs are mainly borne by the electricity consumers – with several exceptions, in order to avoid cases of social hardship. The REEA is expected to be enacted by the Austrian Parliament in autumn 2021; it seems likely that the new renewable energy regime will be fully in place and functioning by 2022.
Revision of the State-Aid Scheme for Renewable Electricity under the REEA Proposal
By setting a robust framework for the support of renewable energy sources, the REEA will transpose EU law (RED II and the EEAG). The financial support scheme for alternative power, as envisaged by the REEA proposal, is based on a two-pronged approach: the market premium (Marktprämie), which is designed as operating aid, and the investment aid.
Operating aid scheme
The market premium is intended to compensate for the difference between production costs and the average market price for electricity for a certain period of time. It is therefore a constant support for the traded (and actually fed-in) electricity – which, however, only arises to the extent that the market price for electricity is below the "anticipated production costs". According to the REEA proposal, the value to be applied to the anticipated production costs for hydropower, biogas, small biomass plants and – at least until 2024 – also for wind energy, should be uniformly defined for each technology by means of an ordinance issued by the Federal Minister for Climate Protection. For solar power, biomass – and from 2024 onwards most likely for wind power, too – the anticipated production costs are determined via a bidding process.
At the time of writing, the operating aid scheme has not been cleared by the European Commission under state-aid law. It needs to be seen when and under which conditions the Commission approves the Austrian state-aid scheme for renewable energy. Amendments of the REEA proposal cannot be ruled out.
Investment aid scheme
The investment aid is designed as a one-off payment. Power generating units (and, if they come together with solar panels, also storage facilities) are eligible for investment aid, provided they are connected to the grid and equipped with a smart meter. The grants are awarded in specific funding calls. The REEA proposal foresees an investment funding budget of EUR60 million for solar power, EUR30 million for hydropower and EUR1 million for wind power. The investment aid for hydropower shall be awarded on a "first-come, first-served" basis; the investment aid for wind and solar power shall be awarded via a competitive bidding process.
Supporting Scheme for Renewable Biogas and Green Hydrogen
The REEA proposal covers also renewable gases, particularly hydrogen (including synthetic gas) and gases that are obtained from biological waste, provided that only renewable energy was used for the production process. In a nutshell, the proposed funding scheme for renewable gases is as follows.
It goes without saying that green hydrogen – which is commonly seen as the future fuel for the Austrian industry – needs alternative energy in order to be considered as renewable. The REEA proposal contains new rules on the proof of origin of renewable energy. All generated alternative energy units – irrespective of whether it is electricity, gas and district heating – shall be certified and registered on a newly constituted Guarantee of Origin Database. The data should be partly made publicly accessible in a specific register for generation units.
Establishing Energy Communities
Until now, the joint production of renewable energy and its sharing is facing strict regulatory requirements. In transposition of the RED II (EU) 2018/2001 and the Electricity Directive (EU) 2019/944, the REEA proposal introduces the Renewable Energy Community (REC) and the Citizen Energy Community (CEC). These models offer new possibilities for the co-operative generation of renewable energy; they are considered to have the potential of turning the power market upside-down.
Both the REC and the CEC need to be established as associations with legal personality consisting of at least two members. The circle of potential members is limited to private individuals, SMEs and municipalities; the REEA proposal also allows power producers to participate in electricity RECs as long as they are not owned by a power supplier or trader. In Austria, the following legal forms come into consideration for the constitution of a REC or CEC: Verein (registered association), Genossenschaft (co-operative) and Gesellschaft mit beschränkter Haftung (limited company).
REC require local proximity between its members and the renewable power plant(s) that share the same distribution system. Since RECs are not using the high voltage grid, the shared electricity benefits from lower grid tariffs. Whereas RECs are open for any form of renewable energy, CECs are limited to electricity; however, the electricity must not be produced from renewable energy sources. In contrast to RECs, the establishment of a CEC does not require local proximity.
The first movers in the market are preparing themselves for establishing energy communities. Due to the reduced grid tariffs, RECs seem to be of particular interest; it is to be expected that a considerable number of RECs will be established as soon as the REEA enters into force.
Recent Case Law Could Jeopardise Authorised Renewable Energy Projects
The Supreme Administrative Court (Verwaltungsgerichtshof) has caused controversy with some of its recent rulings. For example, recognised NGOs who were omitted in the past can now challenge nature conservation permits even years after their approval. The affected projects are therefore on hold until further notice.
The rulings of the Supreme Administrative Court regarding the nature conservation legislation of the Austrian regions Lower Austria and Carinthia are of particular relevance for multiple reasons. In two recent decisions concerning the Lower Austrian nature protection law 2000 (Niederösterreichisches Naturschutzgesetz), the Supreme Administrative Court addressed the transitional provisions of the Aarhus Convention that were enacted in 2019. These would allow officially recognised environmental NGOs (ENGOs) to participate in the proceedings while also safeguarding legally binding administrative permits.
In 2018, an authority forwarded a permit to an ENGO, in regard to the proceeding of a hydropower plant, which had been validated in 2012. However, in this instance, the Supreme Administrative Court saw a connection to the proceeding, which resulted in Aarhus-related transitional provisions of the Lower Austria nature conservation legislation being rendered void. The outcome may be the result of the specific legal situation in the nature conservation legislation of Lower Austria.
Certain statements of the Supreme Administrative Court regarding the legal position of the ENGOs seem to be generalisable: ENGOs can be qualified as omitted parties on proceedings in line with the CJEU ruling C-664/15 ("the Protect case"). The administrative permit has not become legally binding for them due to a lack of involvement. It remains to be seen how the Supreme Administrative Court will judge the Aarhus provisions in other (federal state) laws, in which the ENGOs ex-post right to appeal is regularly limited in time. Legal certainty, but also the chance of achieving the climate targets (renewable energy projects seem to be particularly affected by subsequent objections), would in any case be increased by a timely confirmation of these transitional provisions.
Another recent case concerning a wind project in the Austrian region of Carinthia is to be viewed differently. The nature conservation permit for a wind farm was issued before the adjustment of the regional natural conservation legislation in line with the Aarhus Convention. In order to inform the ENGOs of the positive decision, and by doing so comply with the CJEU’s reasoning in the Protect case, the permit was publicly announced. However, according to Supreme Administrative Court (22 March 2021, Ra 2020/10/0036), more should have been done – namely, the authorities should have issued the decision to all NGOs registered in Carinthia. Considering this has not been the case, all disregarded NGOs are eligible to file a complaint. For the NGO to complain months after perusal does not constitute an abuse of law.
New Developments in Planning Law
The ambitious climate goals and renewable electricity expansion targets have sparked a rise in the planning of power plants for renewable energies in recent years. This “boom” – especially the significant increase of big wind power and solar power production plants on open spaces – potentially conflicts with other uses, particularly agriculture, forestry and recreation. The planning laws of the nine federal Austrian provinces have reacted to these challenges by trying to manage these conflicting interests, while at the same time supporting the overall federal climate goals, – a delicate balance with very different outcomes. As planning law, in principle, remains within the sole competence of the provinces, it is not easy to immediately see where and subject to which (new) rules solar and wind power plants can be built.
The solar power plants planning law, in principle, only provides for special rules if they are installed on open spaces – ie, not on the roofs or facades of buildings. In turn, the size of the power plant (defined by capacity or area used) is decisive for the question of which rules apply for solar power plants on open spaces. In most federal states, such plants are not permitted in residential areas, and are only permitted in industrial and commercial areas if there is a close connection to the operational facilities. Traffic areas (especially streets and their surroundings) are usually so narrowly defined by laws that, for the most part, the construction of solar plants is currently not permissible. However, through two amendments last year, the planning laws of two federal states (Lower Austria and Upper Austria) now explicitly allow for solar power plants in traffic areas; this means that, in the future, solar power on noise barriers of motorways will be possible, for example.
The most detailed (and also the most complicated) planning law rules for solar power plants concern open spaces. The general rule here is that plants bigger than a legally defined size are generally only permitted on specially designated areas. The municipalities (which are responsible for the specific zoning) are generally only allowed to designate such areas in certain “suitability zones” that were previously established by a planning act of the federal province. Burgenland and Lower Austria are currently preparing such regulations – however, as long as they have not been approved, there is a de facto stop for new (bigger) solar power plants on open spaces.
Similarly, bigger wind plants (usually defined by capacity) are generally subject to special planning law rules. A number of federal provinces have enacted regulations defining “suitability zones” for wind power plants in recent years, with the consequence that municipalities are only allowed to define special areas for wind power plants within these “suitability zones”. As with solar power plants, however, bigger wind power plants can usually only be built on such special zoning areas.
The Austrian regulatory framework on renewable energy is on the move. By stipulating two ambitious national targets – 100% of domestic electricity consumption shall be covered by renewable energy sources by 2030 and climate neutrality by 2040 – policy-makers are accelerating the development of the green energy sector. The Renewable Energy Extension Act will provide for substantial funding and allow "prosumers" (ie, those who both produce and consume) to build energy communities. Although the general situation for renewable energy projects and green investments is improving due to these legislative actions on a federal level, certain developments on a regional level (eg, the zoning for wind and solar power) and in the case law have the potential of making approval procedures more complicated and time-consuming.