Renewable Surcharge to Rise to 6.3 ct/kWh?

The renewable surcharge will rise to 6.3 ct/kWh in 2014, newspapers like Frankfurter Allgemeine Zeitung (FAZ) and Rheinische Post (RP) reported prior to the official announcement by the four German transmission operators 50Hertz, Amprion, TenneT and TransnetBW on 15 October 2013.

The renewables surcharge pursuant to the Renewable Energy Sources Act (EEG), the EEG surcharge, amounts to 5.277 ct/kWh in 2013, after having steadily and often steeply risen over the last years (A table showing the development of the EEG surcharge can be found here). An increase to 6.3 ct/kWh would be a rise of 20.53%.

With the renewables surcharge consumers pay for the difference between the fixed feed-in tariffs paid pursuant to EEG for renewable energy fed into the grids and the sale of the renewable energy at the EPEX Spot power exchange by the TSOs. As renewable energy enjoys priority in the German grids, a growing amount of green energy has to be sold by the TSOs, also at times when demand is low, driving down prices. According to data by the TSOs renewable energy renewable energy fetched on average 32.99 EUR/MWh.

There have been many proposals to rein in the EEG-related costs. In February 2013 the Federal Economics and Environment Ministries had presented a joint proposal for an overhaul of the EEG. Efforts to reach agreement with the federal states, however, failed. Prior to and following the Federal Election on 22 September 2013 many institutions presented proposals for an EEG reform, including the Federal Association of the Energy and Water Industry (BDEW), Umbrella Organisation of the German Industry BDI and the German Advisory Council on the Environment (Sachverständigenrat für Umweltfragen (SRU). However, the conservative CDU party under Mrs Merkel and the Bavarian sister party CSU lost their liberal coalition partner FDP, which did not make it into parliament. CDU/CSU are currently in pre-coalition talks with the Social Democrats (SPD) and the Greens (Alliance ’90/The Greens) in order to gauge the chances of successfully forming a coalition (for our series on the Party Profiles prior to the election, please see here).

As Mrs Merkel ruled out retroactive subsidy cuts (initially contained in the above mentioned proposal by the Economics and Environment Ministry) and her coalition partners are not likely to demand either, EEG costs may only fall slowly as existing plants receive feed-in tariffs for a period of twenty years plus the year of commissioning (cf. Section 21 para. 2 sent. 1 EEG). In 2012 consumers already had to pay aboutt EUR 20 billion in support of renewable energy.

One way of cutting costs would be to reduce the possibilities for large-energy consumers to apply for a reduced EEG-surcharge. However, the German industry, which already pays some of the highest electricity prices fears for its international competitiveness, and is therefore heavily opposed. Another possibility would be to cut the electricity tax that is also added to the electricity bill. The demand has been popular with the SPD and the Greens (for more information on the Party Profiles prior to the election, please see here).

Source: Frankfurter Allgemeine Zeitung; Rheinische Post

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