Austria's Climate and Energy Fund has launched a €17.9 million tender program … Contact online >>
Austria''s Climate and Energy Fund has launched a €17.9 million tender program
ICLG - Renewable Energy Laws and Regulations - Austria Chapter covers common issues in renewable energy laws and regulations – including the renewable energy market, sale of renewable energy and financial incentives, consents and permits, and storage.
The main participants in the renewable energy sectors for both gas and electricity in Austria are the utility companies (especially the utility companies of the provinces and Verbund AG) and their subsidiaries and private entities that operate renewable energy plants and infrastructure.
Austrian renewable energy policy and regulation is – as mentioned – characterised by the distribution of competences between the federation and the provinces.
On the federal level, the legislative competence lies with the Austrian Parliament, while the administrative competence is divided between various ministries. The most important ministries in the context of renewable energy are:
On the provincial level, the legislative competence lies with the provincial parliaments. The highest administrative authorities are the provincial governments (Landesregierungen). The provinces have the legislative competence for environmental topics, such as nature protection laws, building codes or spatial planning laws. Their executive competence covers not only provincial legal acts but – for example – also federal laws such as the Environmental Impact Assessment Act (Umweltverträglichkeitsprüfungsgesetz, UVP-G).
The district administrative authorities enforce numerous federal and provincial legal acts. Finally, municipalities enforce certain aspects of planning law, such as land use and zoning plans, as well as building law.
The Austrian market regulator for both the electricity and the gas sector is Energie-Control Austria für die Regulierung der Elektrizitäts- und Erdgaswirtschaft (E-Control). Its task is to supervise the unbundling of the electricity and gas markets. To fulfil this task, E-Control has several executive rights, e.g., the remittal of ordinances on tariffs or the determination of non-discriminatory access to the grids.
The federal government holds ownership stakes in energy companies such as Verbund AG or OMV AG. The provinces also hold stakes in provincial utilities. The share of stakes varies; in some cases, the government(s) hold(s) up to 100%.
In addition to the previously mentioned EAG as the most important funding instrument of renewable energy projects, the government recently announced and partially implemented several other legislative acts. These include, for example, the implementation of the Renewable Heat Act (Erneuerbare-Wärme-Gesetz, EWG) and the amendment to the Energy Efficiency Act (Energieeffizienzgesetz, EEffG). Furthermore, the draft of the Renewable Gas Act (Erneuerbare-Gase-Gesetz, EGG) was adopted by the Council of Ministers on 21 February 2024 and forwarded to the Federal Parliament for further consideration.
There are further legislative plans in the field of renewable energies that are of great importance for meeting the climate goals (see question 9.1 below).
In Austria, there are various options for financial support for the expansion of renewable energies. Funding and investment subventions according to the EAG depend, among other things, on whether the plant is newly built or adapted and on the type of energy source (e.g., photovoltaic, biomass or wind power plants). In addition to the funding provided by the federal government, there is a wide range of funding provided by the provinces, which is in most cases also linked to the type of energy source.
The government also focuses on promoting the expansion of renewable energy in the private sector (e.g., subsidies for the expansion of PV systems on single-family homes), thus also pushing citizen participation. In addition, so-called renewable energy communities (EEG) and citizen energy communities (BEG) have been created (see question 3.4 below for more detail).
Due to its geographical features, the main types of renewable energy in Austria are hydropower and wind power. Also, biomass plays an important role in the renewable energy market. Although demand for photovoltaic systems has increased enormously due to the recent increases of energy prices, the path to achieve a production of an additional 11 TWh until 2030 is still ambitious. Considering that electricity makes up only about one-third of Austria’s total energy demand (the other two-thirds stemming almost exclusively from fossil fuels), an even more ambitious expansion of all forms of renewable energy would be required to achieve the goal of climate neutrality in 2040.
Finally, the Renewable Energy Expansion Act has also increased the focus on the use of renewable gas. The goal is to increase the share of nationally produced renewable gas in Austrian gas sales to 5 TWh by 2030. Details on the planned production and use of hydrogen are laid down in the Austrian hydrogen strategy.
Austria had a head start to the energy transition due to its geographical location and widely available hydropower resources. Additionally, the expansion of wind power plants started (especially in the Eastern provinces) as early as the 2000s.
Civil society and non-governmental organisations (NGOs) play a big and ambivalent role in Austria’s energy policy:
The renewable energy markets are regulated in the Austrian Electricity Act (Elektrizitätswirtschafts- und -organisationsgesetz, ElWOG), the Natural Gas Sector Act (Gaswirtschaftsgesetz, GWG) and the Pipeline Act (Rohrleitungsgesetz).
The permitting of renewable energy infrastructure is governed by various laws, depending on how and where energy is produced, transmitted and/or distributed. Central laws in this context include the UVP-G (Environmental Impact Assessment Act (Umweltverträglichkeitsprüfungsgesetz, UVP-G), Water Act (Wasserrechtsgesetz, WRG), High Voltage Current Lines Act (Starkstromwegegesetz, StWG), Forest Act (Forstgesetz, ForstG), Trade Act (Gewerbeordnung, GewO) or, at the provincial level, the respective Building Codes (Bauordnungen, BauO), Electricity Acts (Elektrizitätswesengesetze, EIWG), Nature Protection Laws (Naturschutzgesetze, NSchG) and Spatial Planning Laws (Raumordnungsgesetze, ROG).
The main legal challenges for the investment in and development of renewable energy projects in Austria are the environmental regulations that are amongst the strictest in the world, extensive participation rights of numerous parties in permitting procedures and the resulting long procedures with sometimes hardly predictable results.
Further challenges arise from the slow expansion of network capacities (which to some extent may also be attributed to the strict environmental regulations), insufficient staffing of authorities and the lack of sufficient subsidies.
In Austria, there are no tendering procedures for specific renewable energy sites. Thus, in many cases the “first come, first served” principle applies.
Regarding subsidies for renewable energy generation, the EAG stipulates tendering procedures for subsidies for various forms of renewable energy projects (but – as mentioned – no specific sites). Depending on the specific renewable energy technology, market premium models (aiming to compensate the difference between market price and production cost) and investment premium models (grants for the construction of renewable power projects) are in place.
Finally, some market participants (“sector contracting entities”, Sektorenauftraggeber) must tender services for renewable energy projects, e.g., supply or construction contracts, consultancy, building and other services.
More than 87% of the Austrian electricity demand was covered by renewable energy in 2023 (compared to 78% in 2022). The growth in the last year can be traced back to the significant increase of photovoltaics. The photovoltaic share of electricity generation has more than doubled since 2022, rising from 0.98 TWh in 2022 to 2.35 TWh in 2023, meaning that photovoltaics now accounts for 4.4% of Austria’s electricity generation. The share of wind power rose from 7.19 TWh in 2022 to 8.26 TWh in 2023, meaning that wind power contributed more than 15% to Austria’s electricity generation for the first time.
The remaining energy demand is covered by fossil fuels (oil and natural gas), which is almost exclusively imported.
The legal bases for the Austrian energy markets are, as mentioned above, the ElWOG, GWG and the Pipeline Act. These laws, together with the market rules laid down by the regulator (E-Control), regulate the non-discriminatory generation, transmission, distribution, and supply of energy. Furthermore, the EAG provides a framework for subsidies, market premiums, and other support mechanisms to encourage the development of renewable energy projects. The Green Electricity Act (Ökostromgesetz) establishes the support schemes for renewable energy, such as feed-in tariffs and investment grants.
All forms of renewable energy can be sold and purchased either on exchanges or directly between energy suppliers and consumers. Such contracts (power purchase agreements) are generally governed by civil law and are currently seeing a rise on the B2B level.
The EU Emissions Trading System (EU ETS) is another regulatory mechanism that indirectly affects the sale of renewable power by setting a price on carbon emissions and incentivising low-carbon energy production. The primary piece of legislation that implements the EU ETS in Austria is the Austrian Emission Certificate Act (Emissionszertifikategesetz, EZG).
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