The option for municipalities to contribute financially to the construction and operation of photovoltaic and wind power plants was included in the Renewable Energy Sources Act on 1 January 2021. Since then, various federal states have introduced their own participation laws.
We will show you the latest developments and why these participation laws are necessary to promote renewable energy plants.
Legal status without participation laws
Until 31 December 2020, municipalities were only able to participate to a very limited financial extent in the construction of renewable energy plants on their municipal territory. For example, there was a risk for both parties of making illegal payments of money to the municipality by investors due to the acceptance or granting of an advantage in accordance with §§ 331 ff. of the German Criminal Code (StGB).
These penal laws mainly affect mayors, their deputies and aldermen, but members of municipal councils or city councils can also be held criminally liable as accessories if they vote in favour of such agreements with plant operators.
In this context, the municipality was prohibited from receiving benefits or cash payments to which the municipality was not entitled. The municipality was therefore entitled to demand compensation for the lease of municipal property for non-public roads, cables and foundation sites for the wind turbine. It was also authorised to claim a fee or reimbursement of costs for urban planning measures within the framework of urban development contracts. However, the amount of all these monetary payments must be appropriate and objectively balanced, so that the municipality may not demand more for RE investments worth millions than would normally be agreed.
If investors wanted to increase the acceptance of the citizens of the affected community for the wind farm or solar park through financial incentives, then this was usually only possible indirectly. It is common, for example, for citizens to be able to participate in the wind farm operating company through a cooperative. Community members are also often offered wind savings bonds or discounted electricity rates.
But until now, the only way to give money directly to the municipality for improved infrastructure, so that all citizens in the area benefit, was through complex sponsoring or donation contracts. This is because even with these contracts, the suspicion of accepting undue advantage must be ruled out. This was difficult because the municipality is also responsible for approving the wind farm or solar park, and so there is always a risk that a connection between approval and donation will be assumed.
Involvement of the municipalities in accordance with § 6 EEG
Section 6 of the Renewable Energy Sources Act (EEG) allows operators of ground-mounted wind turbines and photovoltaic systems to give local communities in their vicinity a financial stake in the project. This regulation applies to communities within a radius of 2.5 kilometres of a wind turbine (measured from the centre of the tower) and to those communities and districts in whose area a photovoltaic system is located.
Since the payments may only be made after the renewable energy plant has commenced operation, this financial participation expressly does not constitute the acceptance or granting of an advantage, so that the contracting parties do not incur any criminal law risks. It is also possible to conclude the contract during the project planning phase under the suspensive condition of obtaining the permit and being awarded the contract.
Reimbursement of the financial contribution by the grid operator
The option of a financial participation in accordance with § 6 of the Renewable Energy Sources Act applies to both new and existing installations. The financial participation that installation operators can offer is up to 0.2 cents per kilowatt-hour of electricity actually fed into the grid and, additionally, for notional quantities of electricity in the case of wind power installations.
The plant operator can request the amounts paid to the municipality from the grid operator for the previous calendar year. Exceptions to this are electricity quantities that are not remunerated or subsidised under the EEG (e.g. under a PPA or other direct marketing, in the case of negative electricity exchange prices).
Customise a model contract
However, it is important to note that these payments are made on a voluntary basis. The municipalities have no legal claim to a share, and it is at the discretion of the plant operators whether and to what extent they grant a financial contribution.
In order to clearly define the interests of both parties, the conclusion of a participation contract is recommended. This contract should include details such as the payment period, the amount of electricity involved, the contract duration and possible cancellation conditions. The contract may be concluded before the RE system is approved.
In the case of PV systems, it should be noted that the contract may only be concluded after the development plan has been adopted, if one is required.
The FA Wind has issued a model contract and a model declaration of commitment for the implementation of § 6 EEG. We will be happy to support you in adapting the documents and coordinating with the local authorities.
The explanatory memorandum to the Act also recommends, for reasons of transparency and to increase acceptance, that the municipality should make public the contract concluded with the plant operator and the use of the funds.
Some federal states have also issued their own regulations in addition to Article 6 of the Renewable Energy Sources Act (EEG) in order to further promote the participation of municipalities and to create clear guidelines. Below, we provide you with an overview of the specific regulations in the individual federal states.
Investment laws at state level
Brandenburg
In Brandenburg, operators of wind turbines have been obliged by the BgWindAbgG since 2020 to involve municipalities within a radius of 3 km around the plant. The special levy is 10,000 euros per year and plant.
The municipalities must use the levy to promote acceptance of wind energy plants (e.g. by ‘enhancing the townscape and local infrastructure, promoting municipal events, social activities’).
Mecklenburg-Vorpommern
In Mecklenburg-Western Pomerania, the obligation for investors in wind turbines to sell their shares was introduced as early as 2016 with the BüGembeteilG M-V. Both municipalities and citizens within a radius of 5 km around the plant are to be given a share. There are three possible ways to participate.
Option 1: Share in the company
Citizens and municipalities can participate in the economic success of the wind farm as shareholders. To this end, the investor offers at least 20 per cent of the shares in a limited liability company (GmbH) for sale. The purchase price of the individual shares may not exceed 500 euros.
Option 2: Savings product and equalisation levy
Instead of a share in the company, the investor can offer the citizens an interest-bearing savings product or the municipalities an equalisation levy. The equalisation levy must be used to promote the acceptance of renewable energies.
Option 3: Individual participation concept
Alternatively, the municipality and project developer can also agree on the participation individually. This is reviewed by the Ministry of Economic Affairs and then set out as an obligation. This option is actually the one most frequently used.
Lower Saxony
Since April 2024, the NWindPVBetG has regulated the participation of municipalities and citizens in the revenues of wind farms and open-space solar parks from 1 MW. The law applies to all plants for which approval is received after 18 April 2024.
The plant operator must not only pay a share of the electricity revenue from the operation of the plant to the municipalities, but must also offer citizens and local authorities the opportunity for further financial participation. Violations can be sanctioned with a fine of 1 million euros for refusal and 500,000 euros for insufficient implementation.
The municipalities must use the revenues for measures to increase and maintain public acceptance of wind energy or open-space facilities.
Electricity revenue participation
The mandatory payment for the actual amount of electricity fed into the grid is 0.2 cents per kWh per year and is to be paid to all municipalities within a radius of 2.5 km around the plant. Project developers have the option of applying to the grid operator for a refund of payments made in accordance with § 4 (1) NWindPVBetG.
If plant operators enter into a voluntary agreement with the municipality in accordance with § 6 of the Renewable Energy Sources Act, they can be exempted from the electricity revenue sharing under state law. The agreement must be submitted to the responsible ministry within one year of commissioning.
Additional offer of financial participation
The citizens and local authorities within a 2.5 km radius must also receive an appropriate offer for further financial participation in the economic surplus of the RE plant. The project developer is free to choose the design, but he must publish the offer in the local daily newspaper..
An annual participation of 0.1 ct/kWh and participation with a share of 20% in the project company or in the form of equity-based crowdfunding are considered appropriate. Other forms of participation are possible, but the law does not specify whether these are also appropriate.
The obligation to continue participating financially does not apply to ground-mounted projects with an installed capacity of less than 5 MW, self-supply plants or certain citizens' energy companies.
North Rhine-Westphalia
In North Rhine-Westphalia, the BürgEnG has been in force since December 2023, providing for the mandatory participation of citizens and municipalities in the operation of wind turbines. The project developer must offer financial participation to both municipalities and citizens within a radius of 2.5 km around the plant. This applies to all plants approved after 20 December 2023. Citizen energy companies are explicitly not covered by the scope of the law.
The project developer can choose from a variety of models for participation (e.g. company shares, offers for the purchase of wind turbines, investment products, subsidised local electricity tariffs and savings products, lump-sum payments to a defined group of local residents, financing of a charitable foundation).
If no individual participation agreement can be reached, the project developer must offer the citizens a subordinated loan of €90,000 per MW of installed capacity as a substitute This payment can also be made through an agreement in accordance with § 6 EEG. As long as the project developer fails to fulfil his obligations for alternative participation, he must pay a compensatory levy of 0.08 cents per kWh generated to the municipalities.
The municipalities have to use the payments received to promote the acceptance of wind turbines (e.g. ‘enhancement of the townscape and local infrastructure, promotion of municipal events’).
Saarland
The SGBG, which was announced in June 2024, is based on the state law of North Rhine-Westphalia, but applies to both wind turbines and ground-mounted solar panels. The law applies to all plants approved from 13 June onwards.
The project developer must offer financial participation to both municipalities and citizens within 2.5 km of the plant.
The project developer can choose from a range of models for participation (e.g. participation in accordance with § 6 of the German Renewable Energy Sources Act (EEG), participation in the project company, purchase of investments and investment products, discounted electricity tariffs and savings products, lump-sum payments or financing of a charitable foundation).
If no individual participation agreement can be reached, the project developer must pay the affected municipality 0.2 cents per kWh generated annually in lieu, in accordance with the provisions of § 6 of the Renewable Energy Sources Act. As long as the project developer fails to fulfil his obligations regarding alternative participation, he must pay a compensatory levy of 0.8 cents per kWh generated to the municipalities.
The municipalities have to use the payments received to promote the acceptance of wind turbines (e.g. ‘enhancement of the townscape and local infrastructure, promotion of municipal events’).
Saxony
Since June 2024, the Renewable Energy Revenue Act (EEErtrBetG) has regulated the participation of municipalities in the revenues of wind farms and open-field solar parks from 1 MW in Saxony. The law applies to all plants that receive a permit from 1 January 2025.
This obliges the operators of wind energy plants to pay 0.2 cents/kWh annually to the municipalities within a radius of 2.5 km around the wind energy plants. Operators of ground-mounted PV systems must pay 0.1 cents/kWh to the municipalities in whose area the PV system is located. For PV systems, the mandatory minimum amount is therefore regularly lower than for agreements under Section 6 of the Renewable Energy Sources Act.
As an alternative to the payment obligation, the municipality and the project developer can also reach an agreement on an appropriate individual amount. An agreement shall be deemed appropriate in particular if the economic value is between half and twice the value of the payment obligation. This can be implemented, for example, by an agreement in accordance with § 6 of the Renewable Energy Sources Act. This individual agreement shall be notified to the competent ministry and may be published by the ministry.
In addition, operators of existing plants may enter into an individual participation agreement with municipalities.
The municipalities have to use the payments received for the promotion of wind turbines (e.g. ‘enhancement of the townscape and local infrastructure, promotion of municipal events or social activities’).
Thuringia
In Thuringia, the ThürWindBeteilG has been in force since July 2024, which stipulates that municipalities must make a financial contribution to the operation of wind turbines. The project developer must offer the municipalities a stake within a radius of 2.5 km around the plant. This applies to all plants commissioned after 3 July 2024.
The project developer must offer the municipality an individually tailored participation agreement. An agreement in accordance with § 6 of the Renewable Energy Sources Act (EEG) with the maximum amount provided for therein is deemed appropriate.
As long as the project developer fails to fulfil its obligations to involve the municipality by means of an agreement, it must pay a compensatory levy of 0.5 cents per kWh generated to the municipalities.
The municipalities have to use the payments received to promote the acceptance of wind turbines (e.g. ‘enhancement of the townscape and local infrastructure, promotion of municipal events’).
If you have any questions about the topics above, please feel free to contact us – we look forward to hearing from you.