72% Increase in EEG Renewable Energy Reallocation Charges for 2011

As of January 2011, electricity consumers will have to pay a 72% higher EEG reallocation charge (EEG Umlage) of 3.53 Cent/kWh, the transmission system operators announced today. The increase from previously 2.047 Cent/kWh is mainly due to skyrocketing costs for additional solar capacities.

For a private household with an energy consumption of 3,500 kWh, the net EEG reallocation charge will be EUR 12 per month (previously: EUR 7). 19% VAT will be added to the bill.

Consumers should not bear the higher EEG reallocation costs in full, Matthias Kurth, president of the Federal Network Agency, the German grid regulator, said. The increasing amount of renewable energy caused wholesale prices to fall, as expensive power plants would gradually stop operating. Despite the economic upturn, prices for long-term contracts at the electricity exchange had fallen, he pointed out. Süddeutsche Zeitung quotes RWE as saying that the high increase in the EEG reallocation had to lead to higher electricity prices.

In Germany, the Renewable Energy Sources Act (EEG) supports renewable energy to become competitive by stipulating feed-in tariffs that grid operators must pay for renewable energy fed into the power grid. Consumers have to bear the difference between the market price and the feed-in tariffs (so-called EEG reallocation).

Mainly solar generation capacity has sharply increased over the last years, despite yearly degressions of the feed-in tariffs and two additional reductions on 1 July and 1 October this year, agreed upon in the last EEG amendment.

Current estimates for additional solar capacities in 2010 range from over 6 GW to above 10 GW.  The transmission operators assumed 19,399 MW to be installed by the end of 2010, and 28,899 MW to be installed by the end of 2011. PV generation fed into the grid in 2011 was assumed to be 19,399 GWh.

The Federal Network Agency, the German grid regulator, released figures showing new capacities amounted to almost 5 GW at the end of August. At the end of 2009, about 9.9 GW of solar capacity were installed in Germany. Nuclear power capacities amounted to 21 GW.

Transfer payments to operators of renewable energy plants under the EEG apportionment scheme are estimated to increase from EUR 12.7 billion in 2010 to EUR 17.1 billion in 2011. From this, EUR 8 billion shall go to operators of PV systems.

In 2009, PV systems contributed 6,578 GWh to German electricity production. 19,094 GWh came from hydro power, 38,580 GWh from wind power, 4,537 GWh from biogenic waste, and 26,407 GWh from biomass.

The rise in the EEG reallocation charge is widely reported in the media. Reports and comments focus strongly on the additional solar capacity and costs. Frankfurter Allgemeine Zeitung and Rheinische Post had comments which called solar promotion a “madness” that had to be stopped. With a representative of the umbrella organization of the consumer protection organizations (VZBV), the association that represents the interests of industrial and commercial energy consumers (VIK) and the president of the Monopolies Commission, Prof. Justus Haucap, the renown business newspaper Handelsblatt also only published voices critical of the high solar cost.

Apart from critics, Süddeutsche Zeitung also quoted the managing director of the German Renewable Energy Federation (BEE), who said not only the costs for renewable energy, but also its benefits, especially for the environment, had to be taken into consideration. Besides, it was wrong to believe that costs could be avoided by stopping the expansion of renewables, as this would lead to costs for additional conventionel power plants.

Sources: EEG-KWK.net, Federal Network Agency, Handelsblatt, Rheinische Post, Frankfurter Allgemeine Zeitung 15 October 2010, page 11, Süddeutsche Zeitung, BMU

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