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Cost of energy transition

Retail power rates could drop in Germany

It's a conundrum – lower wholesale power prices increase the renewables surcharge. Now, researchers say the lower prices could finally reach consumers. In other words, the renewables surcharge would increase next year, but retail rates might not.

Yesterday, we reported on estimates of how much the renewables surcharge will increase in 2014, and later that day Germany's Energy Agency (Dena) announced its own figures – the highest yet at up to seven cents, an increase of 1.7 cents per kilowatt-hour over the current level of 5.3 cents, which would constitute an increase of around 30 percent in a single year. But researchers at Germany's Institute for Applied Ecology say that retail rates could nonetheless finally drop by 0.6 cents per kilowatt-hour next year – and continue to drop thereafter.

The problem up to now has largely been a time delay; prices on the exchange have gone down, but long-term contracts, which make up most of the market, remain unaffected. One would therefore expect lower wholesale prices to reach retail consumers with a delay equivalent to the length of long-term contracts, which can be around 18 months. As Felix Matthes of the Institute for Applied Ecology explains, "The study shows that a focus on the renewables surcharge alone does not reveal what we want to know – how does the funding spent on renewable energy affect the cost of our power supply?"

Wholesale prices on the exchange are down by a full 20 percent year over year and have reached a new low of less than four cents per kilowatt-hour. The researchers expect that price to drop by a further eight percent over the next year. The renewables surcharge consists of the money spent on renewable power minus the price on the exchange, so lower wholesale prices increased the surcharge. "Up to now, industry has mainly benefited from these lower wholesale prices," says Andree Böhling, energy expert at Greenpeace, which contracted the study.

The researchers themselves focus on how industry exemptions can be adjusted to reduce the renewables surcharge. Furthermore, they call for a higher carbon price, from which low-carbon renewable power would benefit. This week, the EU finally managed to adopt a watered down version of backloading, so perhaps some help is on the way. Nonetheless, it remains to be seen whether power firms will indeed pass on the savings to retail consumers – or whether they will use the news about the rising renewables surcharge to keep retail rates up and pocket the change themselves. Fortunately, the German power consumers do have one weapon at their disposal: they can change power providers. (Sven Ullrich)

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1 Comment on "Retail power rates could drop in Germany "

  1. heinbloed - 08.07.2013, 23:12 Uhr (Report comment)

    According to Bloomberg the power prices in Germany will drop:


    At least in relation to other states still betting on the split of the atom and hydro power.

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