EC probes German RE surcharge

The European Commission (EC) has opened an investigation to examine whether exemptions to the payment of the renewable energy surcharge (EEG surcharge) by many German industries are compatible with EU state aid rules.

The probe is not directed against Germany’s renewable energy law (EEG) as a whole, as some renewable lobby groups had feared.

But the EC says two aspects of the EEG may be in breach of state aid rules.

“The surcharge reduction for energy-intensive companies appears to be financed from a state resource,” the EC claims, adding that the investigation does not prejudge its outcome.

Germany has always rejected that accusation on the grounds that the EEG surcharge is not paid by the state, but by consumers on top of their power bills in order to finance the build-up of renewable energy. Under the EEG, renewable installations in Germany get a feed-in tariff (FIT), usually for 20 years.

“The reductions seem to give the beneficiaries a selective advantage that is likely to distort competition within the EU internal market. The current state aid guidelines do not foresee the possibility of such reductions,” the EC continues.

Germany’s new economics and energy ministry that is led by Social Democrat (SPD) leader Sigmar Gabriel said it will explain on a European level that the EEG support and its exemptions for energy-intensive businesses are no state aid and compatible with EU law.

The new government between Chancellor Angela Merkel’s Christian Democrats and Gabriel’s SPD in its Coalition contract has already signalled that it may reduce the exemptions, but at the same time pledges to protect German industries from too-high power prices.

The government in Berlin is already engaged in an intense and very constructive dialogue with the EC about the future design of the EEG and its exemptions, the economics and energy ministry said today.

The EC also questions the so-called “green electricity privilege”, saying it could result in discriminatory taxation. The reduced EEG surcharge is available to suppliers only if 50% of the electricity portfolio is sourced from domestic renewables and from plants that are not already more than 20 years in operation.

The EC says this seems to discriminate between domestic and imported electricity from green sources.

Germany and third parties can now comment on the measure under review. The EC didn’t say when it would present the findings of its investigation.

In a first reaction, Germany’s solar economy association BSW-Solar has called upon the government to quickly provide clarity on the issue and demonstrate that the EEG itself doesn’t constitute illegal state aid.

It said the European Court of Justice in 2001 had already ruled that the EEG in itself doesn’t constitute an illegal state subsidy.

The exemptions to the EEG surcharge, however, have also been the target of strong criticism in Germany from RE groups and the opposition Green Party, which wants to see them greatly reduced.

Germany’s renewable energy federation BEE was pleased that the EC didn’t extend its investigation into all of the EEG, but rejected the notion that the legislation falls under the jurisdiction of EU state aid guidelines at all.

Competition commissioner Almunia’s office today also stressed that the EC is in the process of revising its guidelines on state aid for environmental protection, a move that annoyed RE groups.

Almunia’s latest draft for the guidelines includes detailed requirements for the re-financing of renewables that aren’t compatible with the currently valid EU guideline for renewable energy, the BEE cautions.

“Almunia’s guideline proposal in no way is acceptable,” says BEE managing director Hermann Falk.

“We rather assume that the new state aid guidelines will be designed in a way that member states continue to maintain the necessary leeway for the build-up of renewable energies and the adequate support instruments for that.”