The levy to finance Germany’s renewables expansion (EEG surcharge) will rise again next year, triggering demands from energy groups to lower power costs by cutting a tax on electricity.
The levy in 2020 will rise to €0.06756 ($ 0.0743) per kilowatt hour most German consumers have to pay on top of their power bills, up from €0.06405/kWh in 2019, the country’s transmission system operators (TSO’s) announced.
The EEG surcharge had fallen for two years, but now is increasing again as lower subsidy levels to be paid following a switch in the allocation of support to competitive tenders are slow to have an effect on overall payments, the German grid agency BNetzA said.
The agency added that EEG costs are rising slightly as last offshore wind arrays are currently being commissioned with support from the old feed-in tariff regime before a steep fall in offshore support (in some projects to zero) kicks in in the wake of the tenders.
German electricity costs for average consumers are among the highest in Europe.
German economics and energy minister Peter Altmaier pointed out that the EEG surcharge for six years has been moving in a narrow band of €0.062-0.069/kWh, proving that the government’s efforts to contain the rise in renewable energy costs are bearing fruits.
“Power prices need to be affordable. Therefore, we have approved a step-by-step lowering of the EEG surcharge from 2021 on in the wake of recent decisions on climate policy.”
The government’s plans to use a future CO2 price to finance a lowering of the renewable surcharge are insufficient, though, Germany’s federation of renewable energies (BEE) said.
Instead of a carbon price of initially €10/MWh in transport and heating from 2021 on – as planned by Berlin – the BEE demands an initial price of €60/MWh in heating as of next year, and also in electricity that would gradually rise. (Link to the BEE's proposal in German here)
The government in its climate plans has spared the power sector of a CO2 price as it already takes part in the European emission trading system.
“Renewable energies through the merit-order effect for years have contributed to low wholesale market prices,” BEE president Simone Peter said.
“With a recovery of wholesale power prices via a higher CO2 pricing the EEG surcharge will fall.”
The federation of German water and energy businesses (BDEW) that represents the energy sector as a whole calculated that channelling part of the CO2 price revenues into the EEG surcharge would result in a decline of only €0.0025/kWh – or a mere €0.73 in average monthly savings for households.
Such use of the CO2 price could also prompt difficulties in terms of European state aid rules, it added.
“It would be much more effective to lower the power tax to a level allowed by European law,” BDEW chairman Stefan Kapferer said.
“That would result in lowering taxes and levies on electricity by 2 cents per kilowatt hour. For an average household that would mean €84 in savings per year.”
TSO’s expect a decline in the expansion of renewable energy plants in Germany of 5.6GW in 2020, down from 5.8GW due to lower expectations for the onshore wind build-up.