German RE levy 'may drop'

A levy German power consumers pay to finance the expansion of renewables (EEG surcharge) could fall next year, the Fraunhofer ISE institute says, but adds that government plans to widen exemptions for industries from the payment of the surcharge may eventually counter such a development.

"As it is likely that there will be a surplus of around €2bn ($2.7bn) on the EEG account at the end of the year, the surcharge without the reform of the EEG (Renewable Energies Act) would not rise further in 2015, but rather fall," says Bruno Burger, who heads the energy data and strategic development group at Fraunhofer ISE.

Consumers currently have to pay €0.0624 per kilowatt hour of electricity they buy from power producers. Energy intensive industries, however, only have to pay a small fraction of the surcharge, which results in higher payments from households and small businesses.

A rapid rise of the EEG surcharge in recent years has led to increasing pressure to contain the cost of the expansion of renewable power in Germany.

Energy minister Sigmar Gabriel in the wake of a reform of the EEG that is currently being discussed in parliament plans to scrap the exemptions from the payment of the EEG surcharge for some companies, while extending them to others – a move widely criticised by renewable energy groups.

As some 300 to 400 additional companies will be entitled to the exemptions in 2015, the EEG surcharge account will be burdened with another €300m next year, Fraunhofer ISE estimates.

In 2016, another 200 companies may be granted the exemption, the institute calculates.

Household consumers already now pay more than 98% of the surcharge, while "privileged businesses" contribute less than 2%, Fraunhofer says.

In 2014, €0.0135 per kWh of the EEG surcharge is a result of industry exemptions, the institute says.