German clean energy subsidy rise opening up Energiewende split

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German clean energy subsidy rise opening up Energiewende split

Monday’s announcement that the levy for clean energy in Germany under the Renewable Energy Sources Act (EEG) would rise by 47% next year may undermine the country’s energy transition by sidelining gas as a generation fuel and forcing up consumer bills ahead of the national elections in 2013.

The rise was formally announced by Germany’s four power transmission system operators and will see the 2012 levy of €0.359 ($0.468) per kilowatt hour (kWh) increased to €0.528/kWh in 2013. The increase will help create a total subsidy for renewable development of an estimated €20.4 billion.

 

Renewable energy sources constitute about 25% of annual consumption in Germany. The government plans to generate approximately 80% of its electricity from renewables by 2050 and is heavily subsidising the development of wind, solar and biomass. By law, renewable energy production is fed into the grid at a higher price than gas- or coal-fired generation.

However, price comparison sites for German power customers predict rising consumer costs as a result of the policy and EEG increase, with household annual bills potentially rising by up to €200. Comparison service Verivox estimates that at least €73 will be added to average bills with a consumption of 4,000 kWh in 2013.

In response to the increase, two senior ministers have proposed very different means of reducing the impact on consumers. Economy Minister Philipp Rösler advocates a reduction in tax accompanying electricity, while recently appointed Environment Minister Peter Altmaier instead favours an advice service that would encourage a reduction in consumption.

Since his appointment, Altmaier has increasingly moved to create more centralised government oversight for the national Energiewende, or energy transition, after differences between Germany’s 16 states slowed the implementation of a switch to new generation sources (see Policy slowing Germany’s energy transition, 15 June 2012).

The energy market appears to favour a model that would focus on a reduction in carbon dioxide costs for fossil fuels, in addition to the focus on renewable energy. Such a move would level the playing field and allow gas-fired power projects to compete with wind farms and solar parks on cost efficiency.

“To ensure effective and affordable climate protection, the focus must be on CO2 abatement costs,” Gerhard König, the chairman of German distribution and storage company Wingas, said in an emailed statement on Monday. “Policymakers must finally realise that renewables are not always the most cost-effective way of avoiding CO2. In this competition for the lowest CO2 abatement costs, renewables must be measured against the costs of the alternatives. If this is taken seriously, the answer will often be natural gas.”

König added that without a focus on gas as a generation fuel the government’s Energiewende will prove “unaffordable”. Germans pay the highest for their power in Europe although, until now, public opinion has remained in favour of a switch from controversial nuclear and dirty coal under the umbrella of the Energiewende, launched post-Fukushima.

In a recent, seven-page policy statement by Altmaier, the minister, who is a member of the Christian Democratic Union party alongside Angela Merkel, admits the EEG needs revising. “Since its adoption in 2000, the EEG has contributed significantly to the expansion of renewable energies in Germany,” Altmaier wrote. “The EEG has also served as a model for similar schemes in over 50 countries. It is, however, also clear that the current EEG is no longer able to accompany the expansion of the Energiewende appropriately.”

By: Joshua Posaner

Source: Interfax (www.interfaxenergy.com)

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