German industry demands more exemptions
Even as the cost of wholesale power for industry drops, the number of firms applying for an exemption to the renewables surcharge continues to grow. In lieu of action from Merkel's coalition, supporters of the energy transition hope that Brussels will step in.
International onlookers have their work cut out for them. The SPD and the Greens are criticizing the Merkel coalition for allowing more and more industrial firms to be exempt from the renewables surcharge. But in fact, the idea comes from the SPD and the Greens, who wished to ensure that the rising cost of electricity from renewables would not scare away energy-intensive firms.
They need not have been worried. The impact of renewables on wholesale power has been the opposite of what's expected. In a recent study (which we will have to come back to in detail in a later post), Germany's Institute of Applied Ecology found that wholesale prices on the exchange are down, not up, and while German industry prices remain higher than the EU average, they "fall comfortably within the range" for other EU countries, according to the study.
The SPD and the Greens mainly are concerned that the firms applying for exemptions are no longer that energy-intensive, nor can they all leave Germany to escape high power prices (such as municipal railway operators). Now, German media report that the number of applications has risen from 2,055 this year to 2,367 for next year – up from around 800 just a few years ago. German Economic Minister Philipp Rösler is hiring 50 new people to handle the onslaught.
The amount of electricity consumption that could be exempt could rise from 107 terawatt-hours to 119.3 terawatt-hours, roughly 20 percent of the approximately 600 terawatt hours consumed in Germany. In other words, the large number of consumers who make up 80 percent of power consumption would have to cover 100 percent of the cost to the benefit of the roughly 2,400 firms that make up 20 percent of power demand.
The EU has announced that it considers these industry exemptions to be illegal state aid. In this case, supporters of the energy transition are hoping that Brussels will indeed force the German government to change a policy that is making the energy transition more expensive for citizens. (Craig Morris)
Here is an estimate of how much renewables are subsidizing wholesale prices in Germany. It's a penny/kWh.
http://www.oeko.de/oekodoc/1795/2013-476-en.pdf
Oops!
According to the linked news reports the Frech electricity price (household tariff) will go up only by ca. 11% within a year.
My excuses.
The French industry's RE-obligations are capped as well
http://www.businessweek.com/news/2013-07-02/germany-to-work-with-france-on-resolving-diverging-power-prices
despite raised FITs for atomic power in France
http://online.wsj.com/article/SB10001424127887323823004578595603823787788.html#
the Frech taxpayer is still subdising atomic power plants. The atomic FITs in France aren't covering the running costs of the atomic industry
http://www.thelocal.fr/20130709/french-electricity-prices-set-for-sharp-rise
Atomic power generated electricity for householders is raised by 30% within 1 YEAR, the average bill going from €35.-/month in June2013 towards €50.-/month in July 2014.
Previous reports talked about an increase of 30% within 5 years ...now they get it within 1 year. And this atomic FIT is still not covering the costs of electricity generation.
Within the last 5 years the electricity price 2014 dropped in Germany from over €90.-/MWh to now less than €40.-/MWh
http://www.taz.de/Kommentar-EU-und-EEG-Umlage/!119841/
Craig... You're always talking about how sensible Germans are. My Opa always told me the same thing. Why oh why is this exclusion nonsense proliferating? It seems completely reasonable for the EU to step in and say... hey... we see what you're doing with the PV and wind support and that's great but it's subsidizing your industry. Please institute an industrial surcharge that cancels out the merit order subsidy effect. I'm sure someone at a place like Fraunhofer has calculated a balancing charge. A penny/kwh surcharge would cost these excluded industries a billion dollars collectively. Is that the end of the world?
If an relatively obvious fix is stuck in gridlock what can we expect for the future restructuring of FiTs or the proposed capacity markets? Is it all just a political dance? Can't upset industry before the election? You'd think industry would see right through that? One could argue that Industry should be pushing for a surcharge adjustment themselves because they like the effect PV/Wind are having on wholesale prices and they don't want to cheat so badly that it disturbs the growth of these new power sources.
You can sketch out a straightforward scenario that has the FiT on PV falling down to wholesale as self-consumption techniques are implemented and optimized. That's going to keep downward pressure on wholesale prices and eventually the surcharge would shrink. Industry would get stable electricity prices with a minimal insurance payment. Seems like something they'd like.
In other words - poor Germans & rich Bavarian dentists alike pay more, so that 5% of all industry companies consuming 20% of all electricity - can get 25% of their electricity for free and the rest significantly cheaper.
Can't really blame the companies for trying to use the opportunities given to them... the unbalanced & amateuerish changes to the regulation by the current government causes a lot of very unfair distortions within the business community.