Germany sues EC over RE probe

The German government is suing the European Commission at the court of the European Union over 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 office of European competition commissioner Joaquín Almunia – to the chagrin of German energy minister Sigmar Gabriel  – opened the probe in December on two grounds, the more important being the argument that the reduction in the payment of the EEG surcharge for energy-intensive companies appears to be financed from a state resource.

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 government in Berlin as part of a revision of the renewable energy act (EEG) plans to reduce the exemptions to the payment of the surcharge somewhat, but Gabriel recently stressed that the reduction won’t be to the order of several billion euros as some had hoped.

The exemptions to the payment of the EEG surcharge are not only criticised by the EC, but also by the opposition Green party and renewables groups, as they make the payment of the surcharge more expensive for the remainder of power consumers – notably households and small and medium-sized businesses.

A rapid rise of the EEG surcharge in recent years has led to an intense debate about the cost of Germany’s Energiewende – its turnaround from nuclear to renewables. Green groups argue that the higher cost of the surcharge due to the exemptions is distorting the cost of the renewables expansion and thus making the Energiewende unpopular.

Gabriel has been fighting off calls for large reductions of the exemption, arguing that this would endanger German industries. He also told the EC that if it were to declare the exemptions state aid, thousands of industrial jobs would be lost in Germany, which could potentially derail the euro zone’s fragile recovery.

Gabriel is slated to meet Almunía next week in Brussels.