Germany’s renewables levy rises slightly in 2020

Germany’s four power transmission grid operators have announced that the country’s renewables levy will rise to 6.756 ct/kWh in 2020, up from 6.405 ct/kWh in 2019. The rise comes after two years of decrease of the surcharge.

It could be the last increase, as the federal government has promised in its Climate Action Programme 2030 to gradually help lower the surcharge from 2021.

“An economy minister cannot be happy about a rising EEG surcharge,” said Peter Altmaier. However, the reforms of German renewables support away from set feed-in tariffs to auctions “have made expansion of renewable energy much cheaper,” he added.

The government’s Climate Action Programme 2030 stipulates that revenues from Germany’s planned CO2 price in transport and buildings will be used to lower the levy by 0.25 ct/kWh in 2021, 0.5 ct/kWh in 2022 and 0.625 ct/kWh in 2023. “Thus, we relieve the power price burden on both citizens and small and medium-sized companies,” said Altmaier.

In 2019, the EEG surcharge makes up 21 percent of the power price paid by an average household. Companies pay about half of the total EEG surcharge, private households a third and the bulk of the rest is paid by public institutions, according to the economy ministry.

As part of Germany’s transition to an energy system largely based on renewable power (Energiewende), consumers pay a renewables surcharge with their electricity bill. It is used, for example, to finance the feed-in tariffs for renewable power and the market premium paid to larger producers. Germany switched to auctions for renewables support to bring down costs, but the Federal Network Agency (BNetzA) cautioned that low auction prices will only gradually leave their mark on the EEG surcharge.

“At present, there are offshore wind turbines, which are still being financed under the old very high remuneration regime. In the coming years, however, tenders for offshore wind farms will begin to take effect,” said BnetzA.

Think tank Agora Energiewende* had forecast before the government decided to use some of the proceeds from the introduction of a carbon price to lower the levy that it will reach its peak in 2021 at around 7 cents/kWh. Around then, the first renewable energy plants will have lived out their 20 years of set feed-in payments guaranteed by the Renewable Energy Act (EEG), leading the levy to "gradually fall", said head of Agora Energiewende Patrick Graichen.

The head of the German Association of Energy and Water Industries (BDEW), Stefan Kapferer, criticised that the share of taxes and levies in the power price is too high. “Out of a 100-euro electricity bill, 53 euros are state-induced,” he said in a press release. Plans by the government to lower the renewables levy would mean a regular household would save only 73 cents in 2021. He called instead for a decrease of the electricity tax to the European minimum, which would lead to savings of 84 euros annually.

Katherina Reiche, head of local utility association VKU, said the government should rather have used the climate package decisions to comprehensively reform the system of German energy taxes and levies. The planned lowering of the renewables levy is “just a drop in the ocean, which evaporates with today’s increase,” said Reiche.

*Like the Clean Energy Wire, Agora Energiewende is a project funded by Stiftung Mercator and the European Climate Foundation.