Germany’s Clean Electricity Costs Decline for First Time

German electricity consumers will for the first time see a drop in the fee added to their bills to fund renewables, a boost for Chancellor Angela Merkel, who has pledged to curb the cost for voters.

Germany’s four grid companies set the EEG Umlage charge paid through power bills at 6.17 euro cents (7.8 U.S. cents) a kilowatt-hour next year, down from 6.24 euro cents now, according to a joint statement. The fee has risen more than fivefold since 2009, helping make household power bills the second-highest in the European Union.

Merkel’s government has sought to reduce the cost of expanding wind, solar and biomass after deciding to close the Germany’s atomic reactors. It reshaped the 14-year-old EEG law granting support to renewables to try to limit aid payments expected to reach 21.8 billion euros next year. Big industrial users are largely exempt from the payments.

The reduced fee “shows that we have successfully stopped the cost dynamic of the past years,” Economy Minister Sigmar Gabriel said in a statement e-mailed by his ministry. “This will help stabilize power prices for consumers.”

‘Breathing Space’

While the reduction gives breathing space, it’s no turning point and doesn’t help companies in a significant way, according to the BDI industry federation that represents about 100,000 companies including Volkswagen AG and Siemens AG.

“It’s urgently necessary to really lower energy costs to secure the competitiveness of the German industry,” Markus Kerber, managing director of the BDI, said in an e-mailed statement. “There are already signs that consumers have to expect further costs, for example for expanding power lines or financing the shutdown of coal-fired power plants.”

Germany needs to invest 25 billion euros in power distribution networks in the next decade because of new solar and wind generators, the BDEW said in a separate statement.

The BEE, the German clean-energy lobby, expects the fee to drop again in 2016 to 6.05 euro cents and then rise again in 2017, to 6.2 euro cents, it said in a statement.

The EEG Umlage was introduced in 2000 and rose each year until now. The average household currently pays about 220 euros a year to finance the expansion of clean-energy sources, which last year provided about a quarter of the nation’s electricity.

Copyright 2014 Bloomberg

Lead image: Grass down arrow via Shutterstock

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