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Germany Seeks Renewable Energy Reform as Households Pay Record Green Surcharge

Germany Seeks Renewable Energy Reform as Households Pay Record Green Surcharge

Germany’s power grid operators boosted the surcharge consumers pay for renewable energy by 18 percent to a record, adding to pressure on Chancellor Angela Merkel’s government to act against rising electricity bills.

The four grid companies set the fee paid through power bills at 6.24 euro cents (8.5 cents) a kilowatt-hour next year from 5.28 euro cents now, according to a statement on the website of TransnetBW. The charge has more than quintupled since 2009, helping to make German household power bills the third- highest in the European Union. Big industrial users are largely exempt from the increase.

Merkel is looking for ways to reduce the cost of renewableenergy subsidies after deciding to close the country’s nuclear power plants. The government will reshape the 13-year-old EEG law granting support to technologies such as wind and solar power once Merkel’s Christian Democratic bloc reaches an agreement with another party to form a new coalition following last month’s elections.

“The next German government will seek to slow new renewable energy projects but will not impose retroactive changes to existing contracts,” Famke Krumbmuller, an analyst with Eurasia Group in London, wrote in a note.

Fukushima Legacy

Nuclear power supplied about a quarter of Germany’s power before an earthquake and tsunami triggered a meltdown at the Fukushima plant in Japan in 2011. The disaster turned the German public and politicians against atomic energy. The government is now seeking to get 80 percent of its electricity from renewables by 2050 from about 23 percent now.

The total subsidy next year will amount to about 23.6 billion euros ($32 billion), which is added to consumers’ power bills. The fee increase will raise the bill of the average German household with 3,500 kilowatt-hours of consumption by about 34 euros a year. Consumers and smaller companies shoulder a bigger portion of the cost of the increase while big industrial users are largely exempt.

The BDI industry federation that represents about 100,000 companies including Siemens AG and Volkswagen AG said in a statement today that Merkel’s third-term government needs to “radically reform” the EEG to reduce industry costs. Steelmakers face 300 million euros of extra charges next year and are “strained to the limit,” said Hans Juergen Kerkhoff, head of German steel lobby Wirtschaftsvereinigung Stahl.

Green Party

Renewables are wrongly blamed for the increase, said Oliver Krischer, energy policy spokesman for the Greens party, which today is continuing exploratory talks on a possible coalition with Merkel’s conservatives in Berlin.

The fee is rising “because the power market isn’t working and the old government has piled more and more industry aid onto non-privileged electricity consumers,” Krischer said today in an e-mailed statement.

Adding wind turbines and solar panels accounts for only about a 10th of the fee’s increase, he said. Utilities such as EON SE and RWE AG should alleviate the burden on households by passing on falling wholesale power prices, he said.

Copyright 2013 Bloomberg

Lead image: Up graph via Shutterstock

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