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Cost of green electricity

German renewables surcharge to rise significantly

Estimates are slowly rolling in for Germany's surcharge passed on to ratepayers to cover the cost of renewable electricity. All of the experts believe the figure will increase by a double-digit percentage.

On October 15, the renewables surcharge ( EEG-Umlage) passed on to ratepayers in order to cover the cost of renewable electricity will be announced for 2014, and already the first estimates are rolling in. For instance, the Institute for Applied Ecology believes (press release in German) that the figure could increase by 0.8 cents per kilowatt-hour, from the current 5.3 to 6.1 cents – an increase of roughly 14 percent.

Green Budget Germany, the organization that spearheaded the country's carbon tax at the end of the 90s, takes a different approach (PDF in German) and simply calculates the budget deficit that has accumulated. It ranges from 1.035 to 1.165 billion euros. The organization does not divide that up by the number of kilowatt-hours consumed in the country because "the German government plans to change the way these costs are distributed, so the level of the renewables surcharge will also change as a result."

If we divide 1.1 billion euros by the approximately 600 TWh consumed in Germany, we get the relatively small figure of 0.18 cents. That figure would increase even further, however, because the surcharge is not passed on to a large chunk of power consumption in Germany. Furthermore, the surcharge will not only rise as a result of accrued debt, but also because more renewable electricity is being generated.

According to German weekly Stern, other experts believe the surcharge could even rise to 6.5 cents – and Stern says the average German power bill for a family of four could rise to above 1,000 euros a year for the first time for a family of three – equivalent to roughly 100 US dollars per month, which is still less than what Americans already pay (the average bill in the summer for a family of four in the US is apparently much higher). In other words, we are talking about higher prices in Germany, not higher costs.

Simply redesigning the surcharge could make a big difference, but what matters in the end is the power price itself, not any particular component. If the retail rate remains stable or even drops, consumers will not mind the surcharge for renewables going up. The big question is whether we should continue to allow wholesale rates to go down and retail rates to go up. (Craig Morris)

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1 Comment on "German renewables surcharge to rise significantly "

  1. photomofo - 02.07.2013, 16:02 Uhr (Report comment)

    Cut the FiT rates down for PV and consolidate the schedules. Ax the off-shore wind plans. Spread the surcharge more equitably and rationally. What else?

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