Government Estimates on Market and Management Premium for 2012

According to estimates, costs for the management premium pursuant to the Renewable Energy Sources Act (EEG), amounted to less than EUR 400 million in 2012, the government said in an answer to a Major Interpellation (Große Anfrage) of the Social Democrats (SPD). The management premium is an element of the market premium that was introduced with an EEG amendment in 2012 to incentivise direct marketing as an alternative for renewable energy plant operators to claiming fixed feed-in tariffs.

The experts, who were continously evaluating the market premium, believed that the costs relating to the management premium amounted to less EUR 500 million in 2012 from which EUR 100 million in costs avoided for the selling of the electricity by the transmission system operators (TSOs) had to be deducted, the government said.

If renewable power plant operators decide not to claim the fixed feed-in tariffs pursuant to the EEG, but sell the electricity generated themselves, they are entitled to a market premium in addition to the revenue obtained by the sale of the electricity (Section 33g EEG). It is calculated as the difference between the EEG feed-in tariff and the monthly ex-post average price at the energy exchange and a management premium that differs with respect to the various forms of renewable energy. The management premium covers transactional costs like the cost for the listing at the energy exchange and other trading related costs as well as the costs for forecast errors regarding the actual amount of energy fed into the grid. It was criticised as being too high by VIK, the association that represents the interests of industrial and commercial energy consumers, even before its introduction.

The market premium soon proved to be a considerable success with renewable power plant operators. Up to November 2012 renewable power plant operators announced to claim the market premium for a capacity of 28,500 MW, the government informed in its answer to the Major Interpellation. According to data from (the internet site of the German TSOs showing EEG related payments and revenue), the TSOs paid EUR 2,922,692,993.12 in 2012 for the premiums pursuant to Sections 33g EEG (market premium) and 33i EEG (so-called flexibility premium for biogas).

In July 2012 the government announced to cut the management premium for 2012. The respective ordinance cutting premiums for wind and solar power has meanwhile been promulgated (please see links below). For 2013 the Environment Ministry therefore believed that costs for the management premium would be lower amounting to roughly EUR 300 million after deducting the marketing costs avoided by TSOs, the government said.

The market and management premium contribute to the rising EEG related costs for which consumers have to pay with the so-called EEG surcharge that currently amounts to 5.227 ct/kWh. Last week Economics Minister Rösler and Environment Minister Altmaier proposed to freeze the EEG surcharge for 2014 and thereafter introduce a cap to further increases. In order to limit EEG related costs, they inter alia proposed that EEG power plants which start operating as of 1 August 2013 shall be obliged to market the electricity themselves (mandatory direct marketing), except for plants with a capacity of below 150 kW. At the same time the management premium that is part of the direct marketing premium pursuant to Section 33g EEG shall be abolished.

Source: Bundestag, Major Interpellation ref. no. 17/12246