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How does the German “Mieterstromgesetz” [Tenant Electricity Law] work?

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In the end of July 2017, the German law on the promotion of tenant electricity (Gesetz zur Förderung von Mieterstrom) entered into force. With this law, tenants shall benefit from the energy transition. In fact, the law promotes landlords or system operators. Prior to this law, renewable electricity generated mostly by PV panels on the roof of houses or electricity generated by combined heat and power units (CHP) was mostly not used directly in the building but fed into the national electricity grid. The reason was the complex business model for selling the electricity to the users and the relatively small economic benefit for the system operators. The new model makes the electricity supply to the tenants more attractive, since the system operator receives a supplement for the tenant electricity of about 2.2 to 3.8 cent/kWh in addition to the money the tenant pays for the electricity. This is most attractive in areas where grid charges are high like in Berlin or Hamburg.