02 Nov 2016 | Sören Amelang

Industry grid fee rebates top 1 billion euros, fuel reform debate

German power consumers will have to shoulder grid fee rebates for energy-intensive industry in excess of 1 billion euros next year, sparking renewed calls for reform of the system to pay for keeping the grid stable as renewable power production rises.

The rebates are set to rise more than 20 percent to 1.115 billion euros in 2017. That will mean the surcharge added to consumer power bills to finance the rebates will rise from 0.378 to 0.388 cents per kilowatt-hour (ct/kWh).

The operators published their forecast last week in a technical table, which went unnoticed by the press until Green MP Bärbel Höhn drew attention to it, sparking numerous press reports this week.

The increase has triggered fresh calls to abolish exemptions from the rising costs of keeping the grid stable, as an ever-greater share of the Germany’s power demand is covered by renewable sources.

Rising grid fees have contributed to higher power prices both for households and those businesses without exemptions (for more detail, read the CLEW factsheets What German households pay for power and Industrial power prices and the Energiewende).

The cost of the Energiewende to consumers is already a live issue. Last month, a rise in the surcharge consumers pay to fund renewable power production sparked debate over reform of the support system for renewables.

The renewable energy surcharge will rise from 6.354 cents per kilowatt-hour (ct/kWh) to 6.88 ct/kWh next year.

Boosting production of solar and wind power 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.

Despite the rapidly rising share of fluctuating renewable power, Germany’s power grid remains one of the most stable in the world.

But the costs of stabilising the grid have gone up sharply. Grid operators must pay for “re-dispatch measures” when large amounts of renewable power threaten to overload the grid. Grid extensions, which would allow that power to be transported to areas where it can be consumed and prevent congestion, are another major expense. (For background, read the CLEW dossier The energy transition and Germany’s power grid).

Grid fees vary across the country but averaged at around 7 ct/kWh in 2016. Last month, grid operator TenneT said it plans to raise its grid fees – which, like the surcharge to cover grid fee exemptions, is added to consumer power bills – by 80 percent next year.

Abolish “unnecessary gifts”?

Since 2012, industry rebates on grid fees have amounted to around 3.5 billion euros, according to government figures.

The Federal Grid Agency (Bundesnetzagentur) said industry rebates were on the rise because both grid fees and the number of companies with exemptions went up.

“The increase will add to pressure on the government to overhaul the system,” Bundesnetzagentur spokesperson Fiete Wulff told the Clean Energy Wire.

Green politician Höhn called the rebates “unnecessary gifts” that should be abolished. “It’s simply impossible to explain why private households should contribute to the power bill of Siemens, slaughterhouses or [retail discounter] ALDI.”

In an emailed statement, Höhn added that the number of companies exempt from the surcharge – which currently stands at around 5,000 – rose each year because businesses used “creative processes” to be included.

The Association of Energy Market Innovators (BNE), which represents the interests of grid-independent energy suppliers and energy service companies, also called for the abolition of “expensive exemptions without effect.”

In a press release BNE head Robert Busch said the system was completely out of date and didn’t fulfil its original aim of stabilising the grid. He added that in the interest of the energy transition, rebates should be replaced by a system that rewards demand and supply flexibility.

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