The levy to finance the expansion of renewables in Germany – the EEG surcharge – will fall next year amid rising wholesale power prices and large reserve funds in the surcharge account, the country’s four transmission system operators (TSOs) said.

The EEG surcharge will fall by 1.3% to €0.06792 ($0.08) per kilowatt hour of electricity in 2018, down from the €0.0688/kWh paid by most consumers as part of their power bills in 2017 (energy-intensive industries are exempt from paying the levy), the TSOs 50Hertz, Amprion, TenneT and TransnetBW said.

The levy has risen in most of the years since Germany introduced its Renewable Energies Act in 2001, and in recent years has led to bitter disputes about the cost of the country’s Energiewende – its transition from nuclear power to renewables.

The surcharge could become a contentious issue at exploratory coalition talks later this week between Chancellor Angela Merkel’s Christian Democrats (CDU), her Bavarian allies, the Christian Social Union (CSU), the liberal Free Democrats (FDP) and the Greens.

The FDP during its campaign for general elections on 24 September had attacked the country’s energy transition on the basis of rising costs and wants to see the EEG surcharge abolished.

The EEG surcharge finances the difference between wholesale electricity prices and the level of support granted to operators of renewables – no matter whether that support has been allocated by fixed feed-in tariffs (FITs) or through tenders. The levy has been instrumental in boosting the share of renewable energy as part of Germany’s electricity consumption to 35% in the first half of 2017, up from 6.8% in 2000.

Germany’s federation of energy and water industries BDEW has called for a reform of the EEG. In order to lower electricity prices for average consumers, the exemptions for energy intensive industries should be financed by the federal budget, the BDEW claims.

“With this, the EEG surcharge could be reduced by a quarter at once,” BDEW chairman Stefan Kapferer said. The group also criticised the fact that the sum of taxes, fees and levies as part of the electricity price has risen to 55%, while the actual electricity only accounts for 19%.

Germany’s renewables federation BEE also wants industry exemptions to be financed by the federal budget, and on top of that calls for the introduction of a CO2 levy to replace a tax on electricity.

The slight fall in the surcharge next year is possible as wholesale electricity prices are expected to rise about 16%, diminishing the gap between electricity market prices and RE support levels, the TSOs said. At the same time, the EEG account this year through September has accumulated €3.3bn in reserves that in great part can be given back to consumers next year.

Transition

German EEG levy nudges lower in 2018 as wholesale prices rise