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German Green Energy Surcharge Rises
German Green Energy Surcharge Rises

German Green Energy Surcharge Rises

German Green Energy Surcharge Rises

German consumers are facing higher electricity bills next year as rising costs for the country’s shift to greener energy will drive a surcharge for renewables to an all-time high despite efforts to curb the trend.

German national grid operators 50Hertz, Amprion, Tennet and TransnetBW announced on Friday that the country’s consumer surcharge to fund renewable electricity would rise by about 8%, from currently 6.35 eurocents ($0.70) per kilowatt-hour (ct/kWh) to 6.88 ct/kWh next year, DW reported.

The increase is less than feared by experts, but sends the surcharge to its highest level since it was introduced 16 years ago, and costing consumers only 0.16 ct/kWh at the time.

According to industry calculations, the new surcharge will increase the electricity bill of a normal German household by about €22 ($24.2) per year—based on an annual consumption of 3,500 kWh—and boosting green costs to about €286 of such a household’s total energy bill.

The surcharge is part of Germany’s Renewable Energy Act, introduced in the year 2000 with the aim of promoting renewable forms of energy generation to a level of 60% by 2035. Each autumn, grid operators set the price of the surcharge for the coming year, using as a basis for their calculation the difference between the wholesale market price for power and the higher remuneration rate for renewable energies guaranteed by the state.

German wholesale electricity prices have been slumping sharply in recent years due to a strong build-up in renewables, leading to overcapacity in markets, especially when the sun shines and the wind blows strongly.

In the first half of 2016, the average power price at the exchange was at 2.5 ct/kWh, down from 3.2 ct/kWh in 2015. Because the surcharge makes up the difference between the wholesale electricity price and guaranteed feed-in payments, the renewables levy increases when the market price falls. This year, the green energy surcharge is expected to cost consumers about €23 billion.

Partial exemptions are given to more than 2,300 companies that are “electricity-cost intensive and trade incentive.” They pay only about 2% of the surcharge although using 25% of Germany’s power. As a result, residential and small commercial customers pick up the slack.

Moreover, when taking into account rising fees to make the German grid capable of handling massive amounts of renewable energy, consumers will on average have to pay 3% more for their electricity, according to price-comparison website Verivox.

 

 

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