Power policy

Austria is on track to surpass its goal of having renewables meet 34% of the country’s final energy needs and 100% of its electricity demand by 2030. The government also aims to install 1 million rooftop PV systems by 2030 under its “#mission2030” initiatives. Renewables are supported through feed-in tariffs and upfront capital grants in the case of small hydro and solar projects, although the government is drafting a new energy law to transition to a premium-based auction system. Originally due by 2021, the final law now looks more likely to be in place in 2022.

Austrian law sets priority dispatch for renewable energy projects over other, non-renewable sources to meet the grid’s demands.

The country has had an energy storage subsidy in place since October 2019. An amendment to the Green Electricity Act provides up to EUR 12 million in subsidies for storage systems for three years with a limit of 50kWh per plant.

Power prices and costs

Austria’s wholesale power prices are lower than most of its neighbors due mainly to an abundance of large hydroelectric generation. Cheap hydro has long reduced the impetus to invest in other renewables, although this has begun to change as renewables’ costs have fallen. Meanwhile, the country’s low-carbon power fleet has largely been shielded from the rising EU carbon price.

Power market

Various hydroelectric technologies provide the bulk of generation and flexibility services in Austria – pumped, small and large hydro installations represented over half the 21GW of installed capacity in 2020. Other renewables – mainly rooftop PV and onshore wind – have grown from a low base over the last decade to reach over 1GW. The power sector has been partly unbundled and liberalized, but the state retains a central role. Publicly-owned players are the foremost owners of renewables capacity, with Land Burgenland and Verbund topping the list. All segments of the country’s power sector are open to private participation with the exception of transmission. To date, companies have signed few bilateral power-purchase agreements with clean energy projects, partly due to the availability of cheap hydropower. Renewable electricity is purchased as a country obligation in Austria.

Austria has some lithium-ion battery production facilities online, including factories owned by Samsung and BMZ.

Doing business and barriers

Austrian electricity demand is rising gradually, but growth is unlikely to accelerate without expanded efforts to electrify the country’s heating, industry and transportation sectors. Austria has relatively unspectacular wind or solar resources.

A shift toward organized auctions to procure clean power is under way, but when such tenders will be held remains unclear. Adding to the uncertainty, investors currently have little visibility on how the framework will ultimately work. With the arrival of Covid, policy-makers delayed the phase-out of clean energy subsidies and extended the period of qualification for projects.

Austria has struggled to attract international capital, despite sporting a stable, specialized economy. The country provides a robust framework for private investors, but establishing a new company can be onerous. As in many EU countries, VAT rates and import duties are not reduced for renewables equipment.

Austria has offered subsidies to promote energy storage investment. One of the aims is to promote a proof-of-concept process to enable small-scale distributed energy resources (DER) to participate in frequency regulation on the grid.

EV market

From 2019 to 2020 total car sales in Austria plummeted 29%. Despite this, the number of battery-electric vehicles (BEVs) sold doubled year-on-year. The growth was supported by a policy change to make taxes punitive for higher-emission vehicles. For vehicles with emissions exceeding 275 g/km, the tax surcharge rose from EUR 20 to EUR 40 per gram of CO2/km.

Under Austria’s Integrated National Energy and Climate Plan (NECP), the government is to convene an inter-ministerial process to identify and ultimately remove incentives and subsidies that run counter to de-carbonizing the transport sector. This process has yet to kick off, however.

EV policy

Austria’s 2030 goal is to increase the share of renewable energy in transport to at least 14% through a mix of EVs, biofuels and hydrogen. To hit its goal, the government offers consumers purchase subsidies of 5,000 euros for BEVs. BEVs are also exempt from the Circulation Tax, Standard Consumption Tax, Motor-related Insurance Tax and Benefit In-kind Tax. Austria’s ‘1 million charging stations’ initiative seeks to expand publicly-accessible charging infrastructure at rest stops on motorways with the aim of 100% network coverage by 2030. Private installations are also subsidized by the government.

Buildings market

Under the federal government’s Climate and Energy Strategy (‘#mission2030’), Austria has set a goal of improving primary energy intensity of the whole economy by 25-30% compared to a 2015 baseline. The country’s building laws have also been tweaked in response to requirements in the EU’s Energy Performance of Buildings Directive. The provinces, which are responsible for building regulations, have recently agreed on a new roadmap for achieving ‘nearly zero-energy buildings’ for new buildings starting in 2021.

Buildings policy

By shunning fossil fuels in new buildings through thermal renovation and switching to high-efficiency district heating in the existing building stock, Austria seeks to cut CO2 by 3-5m tonnes by 2030 in an economically sustainable manner. For that purpose, the Austrian National Council passed a federal law prohibiting the fitting of oil-fired boilers in new buildings.

The Ministry for Climate Action, Environment, Energy, Mobility, Innovation and Technology’s Energy2050 initiative includes a technology roadmap for deploying heat pumps. Multiple policies are in force to help execute on the initiative. This includes incentives for consumer to purchase heat pumps, and boiler scrappage schemes.