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DGAP-News: 2G Energy AG supports coming into force of 2016 amendment to German Combined Heat and Power Generation Act (KWKG)

DGAP-News: 2G Energy AG / Key word(s): Statement
2G Energy AG supports coming into force of 2016 amendment to German Combined
Heat and Power Generation Act (KWKG)

12.01.2016 / 08:00
The issuer is solely responsible for the content of this announcement.

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  - Management Board identifies impulses for further CHP expansion in
    
Germany


  - Contracting models becoming more attractive

  - 2G expands CHP information offering with CHP Journal, image film and
    new brochures

Heek, 12 January 2016 - 2G Energy AG (ISIN DE000A0HL8N9), one of the
internationally leading manufacturers of gas driven combined heat and power
(CHP) systems, supports the approval of the 2016 amendment to the German
Combined Heat and Power Generation Act (KWKG). This legislation restores
the requisite legal and investment security to 
Germany's
 CHP sector, and
creates the possibilities to further boost CHP systems' share of total
electricity and heating supplies - given the deployment of appropriate
concepts and products. The KWKG essentially creates opportunities for 2G.
With its technologically leading and highly efficient CHP systems and
products relating to service, utilization optimization in electricity
purchasing, as well as rent and lease options, the new conditions enable 2G
to offer economically attractive solutions to energy utilities and
contractors, as well as to industrial and commercial operations that wish
to supply themselves.

Growing support for CHP electricity fed into grid
As planned, the KWKG 2016 came into force on January 1, 2016, and reflects
the German government's paradigm shift towards the "Electricity Market
2.0", which aims to ensure in an environment with high proportions of
renewable energies, a secure price-efficient and environmentally-compatible
electricity supply, encompassing amongst others further development of
load-balancing markets, free price formation and transparency. The KWKG
bolsters the feed-in of electricity into the public grid through higher
compensation rates (dependent of the respective performance category - see
table below), introducing mandatory direct marketing for systems from 100
kW from 2016. Both of these instruments will help to better integrate CHP
systems into the demand-led electricity market via energy supply companies
and municipal utilities.

Contracting models becoming more economically attractive
The amendment to the KWKG offers economic opportunities again for energy
contractors that supply CHP generated electricity locally within client
systems or closed distribution grids as part of the supply of industrial
areas, tenant electricity and city districts solutions, for example, rather
than within public supply grids. Such systems receive their own CHP subsidy
for supplies to properties, as well as corresponding CHP subsidies when
being fed into public grids, if the full German Renewable Energies Act
(EEG) levy is paid on the CHP electricity they generate. Moreover, smaller
CHP systems up to 50 kW benefit from the setting of the subsidy duration to
60,000 full utilization hours without time limitation. The potentials of
such contracting models (which are desirable from an energy policy
perspective) can be tapped by energy utilities and contractors especially
in the residential sector, and within industrial and commercial structures.

Decentralized site supplies remain an attractive alternative despite
capping of proprietary electricity payment
The only fly in the ointment in relation to the amended KWKG is the
reduction in compensation for self-utilized electricity generated from
proprietary CHP systems: about one quarter in the case of lower performance
classes up to 100 kW, and the CHP subsidy falls away entirely for new
systems above 100 kW electric output. As announced, a proportional EEG levy
(2016: 35 %, 2017: 40 %) still has to be paid until the end of 2017 for CHP
systems for proprietary supply ordered after August 1, 2014. Overall, the
highly efficient cogeneration of electricity and heating remains an
attractive alternative for decentralized site supplies for industrial and
commercial operations, as well as the residential sector, following the
amendment to the KWKG, because the EEG levy and grid payments will rise
further prospectively, so that costs for proprietary electricity can lie
significantly below grid electricity purchasing costs. In combination with
heating utilization concepts for the respective site, investments in gas
operated CHP power plants remain economical, with relatively short payback
periods.

The KWKG 2016 now sets designated volume targets for expansion in absolute
terawatt hours (TWh): CHP net electricity generation is to be increased to
110 TWh (corresponding to 19 %) by 2020, and to 120 TWh (corresponding to
20 %) by 2025. Given approximately 6,000 operating hours per year and an
average of 500 kW(el), these 120 TWh would correspond to around 40,000 CHP
systems. Although this falls short of the previous expansion target of 25 %
of total electricity generation by 2020, maximum generation volumes double
to EUR 1.5 billion annually. As to date, support is to be financed through
a KWKG levy via grid payments.

Moderate transition regulations and options
The legislator has structured various transition regulations in a moderate
manner. When ordering a plant by December 31, 2015, future plant operators
have been able to choose whether the plant is to receive the CHP subsidy
and support periods according to the previous KWKG 2012 or according to the
new KWKG 2016, if the plant is commissioned by December 31, 2016. In
addition, mandatory direct marketing from 2016 relates initially only to
CHP systems above 250 kW. Plants below 250 kW retain their entitlement to
marketing of CHP electricity by grid operators if they go into permanent
operation by June 30, 2016. For plants below 100 kW, this even applies
until December 31, 2016.

2G Management Board: KWKG delivers important drivers for sector
Overall, the Management Board of 2G Energy AG appraises the conditions that
have been newly set by the KWKG 2016 as an important impulse to exploit the
economic - as well as climate and resource conservation - benefits of CHP
technology for a further expansion of the Electricity Market 2.0 in
Germany
. Also, market models that do not feed electricity into public grids
have been upgraded. This takes into account the great significance of
energy service providers and the new business models of energy companies
and municipal utilities. By contrast, it is currently very difficult to
assess how the transition from coal to natural gas driven CHP power plants
that is required by the KWKG 2016 will work.

Due to the EU Commission's review of the act in light of EU state aid
guidelines (notification process), significant regulations contained in the
KWKG 2016 are conditionally for the time being. It is nevertheless expected
that the act will be approved soon during the first quarter of 2016.

CHP Journal offers broad information base about market trends, technology
and 2G reference projects
The CHP Journal that 2G is publishing three times a year provides reports
on reference projects for renowned companies, technological innovations and
market trends. In the latest edition, 2G presents the installation of three
biomethane operated CHP modules of the avus 1000c type for Enercon GmbH,
Aurich, with electric and thermal output of 1,200 kW each. It also examines
the topic of the flexibilization premium for biogas operated CHP systems:
many biogas plants in 
Germany
 have reached high operating durations, and
for operators the question arises as to how plant modernization should be
structured. This creates more optimistic prospects for the biogas market
for 2G, because modernization creates incentives for operators to produce
electricity from biogas in line with demand, and thereby boost economic
value. Closely related with this is the digitalization of CHP power plants,
not only in relation to service, maintenance planning and the analysis of
all plant parameters, but also in terms of grid integration and control
functionality. 2G's experts discuss this topic in the CHP Journal. Take a
look at 2G as a company, its reference projects, and services for 2G CHP
power plants, by visiting the company's website at www.2-g.de, where you
can find the latest corporate video, a selection of international reference
projects, and new brochures in download format.

Comparison of CHP supplements pursuant to KWKG 2012 and KWKG 2016



Size of   KWK-G 2012           KWK-G 2016     KWK-G 2016     KWK-G 2016
CHP plant CHP surcharge for    CHP surcharge  CHP surcharge  CHP surcharge
          electricity fed      for self-      for            for
          into the grid &      consumend      electricity    electricity
          self-consumend       electricity    used off-grid1 fed into the
                                                             grid
< 50 kW   5.41 ct/kWh          4.00 ct/kWh    4.00 ct/kWh    8.00 ct/kWh
51 - 100  4.00 ct/kWh          3.00 ct/kWh    3.00 ct/kWh    6.00 ct/kWh
kW
101 -     4,00 ct/kWh          0.00 ct/kWh    2.00 ct/kWh    5.00 ct/kWh
250 kW
251 -     2.40 ct/kWh          0.00 ct/kWh    1.50 ct/kWh    4.40 ct/kWh
2,000 kW
> 2,000   1.80 ct/kWh          0.00 ct/kWh    1.00 ct/kWh    3.10 ct/kWh
kW




1 Only if CHP electricity is supplied to end-consumers within a customer
plant or within a closed distribution grid, and the full EEG levy is paid
for this.

An overview of the DENEFF in collaboration with mpw provides further
detailed information at the following link:
http://www.mpw-net.de/?tx_news_pi1[news]=95

2G Energy company portrait
2G Energy AG ranks among the world's leading manufacturers of cogeneration
(CHP) systems for decentralised energy production and supply by means of
combined heat and power. The company's product portfolio includes systems
with an electric capacity between 20 kW and 4,000 kW for operation with
natural gas, biogas, biomethane and other lean gases. 2G has successfully
installed several thousand CHP systems in 35 countries to date. Especially
in the 50 kW to 550 kW performance range, 2G possesses proprietary
technological combustion engine concepts characterised by low specific fuel
consumptions, high operational availability and optimised service
intervals. Besides the main production site at the Group headquarters in
Heek, 
Germany
, the company has invested in an additional production and
sales & service site in 
St. Augustine, Florida
, USA. 2G's customers range
from agricultural and industrial operations, local authorities, and the
residential sector through to municipal utilities and large-scale
utilities. The high level of customer satisfaction is founded on a dense
service network as well as 2G power stations' high technical quality and
performance. These power stations achieve an overall degree of efficiency
from 85 percent and to well above 90 percent thanks to combined heat and
power performance.
Along with the construction of combined heat and power stations, the
company, located in Westphalia in the north-west of 
Germany
, offers
integrated solutions spanning the planning stage and installation through
to service and maintenance work. In the context of the energy policy
revolution, and as part of modern energy supply concepts, CHP systems are
gaining considerably in importance in intelligent energy grid systems -
so-called virtual power plants - due to their decentralised and scalable
operation, and predictable availability.

2G is consistently expanding its technology leadership through continuous
research and development work, both in gas engine technology for natural
gas, biogas and synthetic gas applications (e.g. hydrogen), as well as in
specific software development. The "virtual power plant" operating type has
been created with a software solution, for example. Overall, the 2G system
is thereby operated on a basis that is "heating-managed and
electricity-oriented" in order to significantly simplify integration within
a grid group. In the energy policy revolution's future electricity market
design, such digitalisation-enabled flexibility forms an indispensable
system-relevant element in combination with solar, wind, biogas and natural
gas producers, and creates a high barrier to market entry for competitors.

The shares of 2G Energy (ISIN DE000A0HL8N9) have been listed in the Entry
Standard of Deutsche Börse AG since July 31, 2007. The share capital
amounts to EUR 4,430,000, and is divided into 4,430,000 shares. The
company's founders held 55.3 % of the shares as of December 31 2015, with
the free float amounting to 44.7 %.

2016 dates
April 28, 2016          Preliminary figures as of December 31, 2015 for the
2G Group, FY
2016 results  guidance
May 25, 2016  Annual consolidated financial statements as of December 31,
2015,
Q1 key figures and business trends 
July 5, 2016   Ordinary AGM, Ahaus
Sept. 27, 2016 Semiannual consolidated financial statements as of June 30,
2016
Nov. 21-23, 2016    German Equity Capital Forum 2016
Nov. 30, 2016  Q3 key figures and business trends

Further information: www.2-g.de

Contact
2G Energy AG
Benzstraße 3
48619 Heek
Telephone: +49 2568 9347-2795
Telefax: +49 2568 9347-15
E-Mail:  ir@2-g.de
Internet:     www.2-g.de


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12.01.2016 Dissemination of a Corporate News, transmitted by DGAP - a
service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.

The DGAP Distribution Services include Regulatory Announcements,
Financial/Corporate News and Press Releases.
Media archive at www.dgap-medientreff.de and www.dgap.de

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   Language:    English                                               
   Company:     2G Energy AG                                          
                Benzstr. 3                                            
                48619 Heek                                            
                Germany                                               
   Phone:       +49 (0)2568-9347-0                                    
   Fax:         +49 (0)2568-9347-15                                   
   E-mail:      service@2-g.de                                        
   Internet:    www.2-g.de                                            
   ISIN:        DE000A0HL8N9                                          
   WKN:         A0HL8N                                                
   Listed:      Regulated Unofficial Market in Berlin, Dusseldorf,    
                Stuttgart; Open Market (Entry Standard) in Frankfurt  
 
 
   End of News    DGAP News Service  
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428155 12.01.2016

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