Germany's renewables surcharge capped at 6.5 cents in 2021 but benefit for customers uncertain

The surcharge on German power customers' bills to support the expansion of renewable energy sources will fall from currently 6.75 to 6.5 cents per kilowatt hour (kWh) in 2021, the country's transmission grid operators have said. The government had promised the cut in the context of its coronavirus recovery programme. It will be financed with state subsidies to ease the burden of power costs for customers. "Without these subsidies, we would have seen a higher surcharge and thus also higher power prices," economy minister Peter Altmaier said. Without the government intervention, the surcharge would have risen to 9.65 cent, according to utility association BDEW.

Altmaier added the first direct government support of about 11 billion euros for reducing the surcharge would amount to a "paradigm change" in renewables financing, which from 2021 onwards would also be financed with proceeds from Germany's new carbon pricing system in the heating and transport sectors decided in the government's Climate Action Programme 2030. "If these proceeds rise, there will be a further reduction of power prices," Altmaier said. In 2022, the surcharge will fall to 6 cents/kWh, he added. The government grants also aim to ensure that Germany's green energy account for funding renewables will come out of the red, after it accrued a loss of about four billion euros in 2020 due to lower wholesale prices caused by collapsing demand amid the coronavirus pandemic.

However, the lowered surcharge is unlikely to translate into significantly lower power costs for households compared to current prices, an analysis conducted by the price comparison website Verivox has found. The cap on the surcharge would reduce the average consumer price by one percent, meaning that a typical household with an annual consumption of 4,000 kWh will pay about 12 euros less for electricity. While the cap would be a "welcome check" on power prices, the surcharge only accounts for about a quarter of the total power price, said Verivox's Thorsten Stock. An expected increase in grid costs, which accounts for another quarter of power prices, could easily offset the lower surcharge, he added. "German households pay the highest power prices in the world. This is not going to change next year." Moreover, the carbon pricing system means general energy costs are set to rise, Stock said.