Cost of renewables remains stable in Germany

Last year, the surcharge to cover the cost of feed-in tariffs for renewables in Germany rose tremendously but was expected to taper off and possibly even drop this year. On Friday, Germany's Network Agency announced the official figures.

Germans are willing to pay an extra 15 percent for the growth of renewables, which currently make up nearly 20 percent of their power supply. Photo Andreas Morlok / pixelio.de

Germany's Network Agency has announced that the surcharge for feed-in tariffs in Germany will increase marginally as of January 1, 2012, up from the current 3.53 to 3.59 cents per kilowatt-hour. Recently, some experts were concerned that the price might rise once again, possibly reaching four cents next year. Had it done so, the cost of renewable electricity in Germany would have doubled in only two years.

The surcharge also has to be seen in the context of the overall retail rates, which varies from one power provider to the other, and German consumers are free to choose the power provider they want. Nonetheless, almost all retail rates are now clearly above 20 cents per kilowatt-hour, and many are approaching 25 cents, meaning that the surcharge for renewables makes up roughly 15 percent of the cost of power in Germany.

Like most other feed-in tariffs programs, Germany's passes on the cost of renewable electricity to all power consumers equally whether they consume a lot of green power themselves or not; some power providers offer 100 percent green power to retail customers, whereas large industry buyers often signed direct contracts at wholesale rates primarily for coal and nuclear. Indeed, the largest power consumers are exempt from the full surcharge for renewables and pay only a slight surcharge to ensure that German industry is not detrimentally affected on the international market.

Last year, when the surcharge rose by 75 percent in one year, many industry onlookers and economists wondered whether the surcharge might be a bit excessive and lead to a surplus in 2011 that would be carried over into 2012; the Network Agency even said that this would indeed happen if too much had been charged. But the sudden swings in energy policy this year, particularly the sudden shutdown of nearly half of the country's nuclear capacity, changed the ball game and caused a reduction in power supply. As a result, there was no surplus, but rather a deficit of 711 million euros at the end of September. This deficit now has to be carried forward into 2012 – part of the reason for the price hike.

The forecast for next year is based on calculations made by Germany's four transit grid operators, who have calculated that they expect to have to pay 17.6 billion euros to owners of renewable power generators, whereas only around 4.9 billion will be taken in from the sale of renewable power on the power exchange. The surcharge passed on to consumers is based on that difference. The estimate is unfortunately only based on the first three quarters of the year, leaving out the last quarter, when photovoltaics – the most expensive generator of renewable power – does not produce as much power. Were the weak quarter for PV included in the calculation, the actual cost would, no doubt, the slightly lower. (Craig Morris)