Falling wholesale power prices due to the Covid-19 demand slump may push up Germany’s surcharge to finance renewable energy and thus actually push up electricity prices for consumers, E.ON chief executive Johannes Teyssen warned.

The renewables levy (EEG surcharge) finances the difference between wholesale power prices and guaranteed prices of support in Europe’s largest economy. As wholesale prices have fallen dramatically, that difference becomes greater, an effect that is exacerbated by declining prices for fossil fuels, and a record feed-in from wind and solar farms early this year.

In the wake of the crisis, the EEG surcharge could jump to up to €0.08/kWh ($0.087/kWh) next year - from €0.0756/kWh this year - E.ON said, despite pledges by the government to lower it.

“The German government’s plan to introduce carbon pricing in all sectors of the economy, which we supported, was accompanied by the promise to reduce the levy on green electricity by at least €0.015/kWh to roughly €0.05/kWh,” Teyssen said.

Higher electricity prices in 2021 would stifle any upturn in the already battered business sector, he warned.

“Consequently, German policymakers need to translate their words into decisive deeds … Germany needs to cap its renewables levy at €0.05/kWh and use the federal budget to cover the revenue shortfall.”

The CEO of the Essen-based utility also said Berlin needs to reduce Germany’s unnecessarily high electricity tax to the European target rate of €0.05/kWh. Together with our additional €500 million in investments, this would create a package that provides financial relief to customers and promotes a sustainable recovery.”

Teyssen spoke at the publication of first quarter 2020 results, which saw sales increase to €17.7bn from €9.1bn a year earlier, and adjusted net income rise slightly to €691m from €650m a year earlier, in part due to the takeover of the grids and customer business of former RWE unit Innogy.

The utility pledged to spend €500m in additional investments in climate-friendly upgrades of energy infrastructure such as the digital economy and e-mobility.