11 Oct 2016 | Julian Wettengel

Germany’s renewables surcharge to rise less than expected - report

Germany’s consumer surcharge to fund renewable electricity will rise to a record high in 2017, but less than experts predicted, according to a report by German newspaper Frankfurter Allgemeine Zeitung. Grid operators will officially announce the change on Friday.

The surcharge will rise 8 percent from 6.35 cents per kilowatt-hour (ct/kWh) to 6.88 ct/kWh next year, Frankfurter Allgemeine Zeitung (FAZ) learned from grid operator sources. Each autumn, grid operators set the price of the surcharge for the coming year, as determined by the Renewable Energy Act (EEG).

The new surcharge will be less than the more than 7 ct/kWh experts predicted earlier this year. According to the article in FAZ, this is because existing savings on Germany's 'green energy account' would be used to finance renewable development in the election year 2017.

The EEG surcharge covers the difference between the wholesale market price for power on the electricity exchange and the higher fixed remuneration rate for renewable energies. It is paid by consumers with their power bill. At 6.88 ct/kWh, an average three-person household would pay about 18 euros more per year, writes Andreas Mihm in FAZ.

When also taking into account sinking wholesale electricity prices and rising grid fees, consumers would on average have to pay 3 percent more (30 euros/four-person household) for their electricity, according to a press release by price comparison website Verivox. This would vary by region.

Using renewables such as solar and wind to cover an ever-larger share of Germany’s power demand is key to the Energiewende – the country’s strategy to decarbonise the economy and phase-out nuclear energy. Renewables are now Germany’s biggest source of electricity. But there have been concerns over the cost of the energy transition. (See CLEW factsheets on household and industry power prices).

The EEG surcharge is often used as a price-tag for the Energiewende, which critics say is inappropriate. They argue that the surcharge was strongly influenced by wholesale power prices and did not reflect many other positive and negative costs of the energy transition policy.

Recent calls for reforming the support system for renewables energies by industry lobby groups, as well as renewables associations, have once again fuelled the discussion about the federal government’s reform of the Renewable Energy Act from earlier this year.

With the aim to reduce the cost for the consumers, the new legislation limits how much new renewable capacity can be built each year and introduces an auction-based system to largely replace feed-in tariffs for renewables.

For background, read the CLEW factsheet Balancing the books: Germany's "green energy account" and the recent CLEW article Renewable energy levy set to rise in 2017 – think tank.

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