New financing for EEG surcharge: Federal government pays more for green electricity

For electricity customers, the EEG surcharge will decrease slightly next year. The state is contributing almost 11 billion euros for this. The main reason is Corona.

Is funded by the EEG, but is not to blame for the increase in the levy: wind turbine in Erkelenz Photo: David Young / dpa

So far, October 15 has been an important date for German electricity customers: on this day, the network operators traditionally announce how high the so-called EEG surcharge will be for the next year. With this surcharge on the electricity price, which household and commercial customers have to pay in full and industrial companies in part, the costs for the expansion of wind, solar and biomass power plants are covered. This year the date was particularly interesting for the Federal Minister of Finance; For the first time, consumers couldn’t care less about it.

It was already clear in advance that the EEG surcharge on the electricity bill would not increase at the turn of the year, but rather decrease slightly – from the current 6.8 to 6.5 cents per kilowatt hour. The federal government had determined this as part of the economic stimulus package. Instead, the additional costs for green electricity are to be financed from the federal budget. Among other things, income from the new CO is to be used for this2-Price that will be charged in the transport and building sector from next year.

However, this subsidy is now more expensive for the federal government than expected. Because arithmetically, the EEG surcharge will increase significantly next year. Without a government subsidy, it would be 9.7 cents, the network operators announced on Thursday. To compensate for this increase, just under 11 billion euros are required. A private household with a consumption of 3,500 kilowatt hours per year will save 10 euros per month including VAT. How the electricity price will develop is still open.

Renewable energies themselves are not the reason for the sharp rise in EEG costs. Their expansion was recently even slower than planned, and the prices that have to be paid for each kilowatt hour fed into the grid have fallen sharply, so that the expansion hardly comes at relevant additional costs leads. The main reason for this is the fact that this year, due to the corona, electricity consumption is around 8 percent lower than expected, which means that prices on the electricity exchange have fallen sharply.

And that in turn drives up the EEG surcharge, because it is calculated from the difference between the fixed remuneration that the operators of green electricity systems receive and the respective stock exchange prices.

For the state, the promised stabilization of the surcharge is more expensive than expected. And in order to keep the commitment to lower the surcharge again to 6 cents in 2022, further funds will probably be required because more than half of the budget of 19 billion euros planned for both years will already be used next year.

Economics Minister Peter Altmaier (CDU) welcomed the lowering as an important part of his concern to “reconcile climate protection and the economy”. For the SPD, parliamentary deputy Matthias Miersch urged a comprehensive reform of the tax system. Green energy expert Oliver Krischer called for the EEG surcharge to be reduced by a higher CO2-Price “pushing to zero”.

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Electricity prices rose by up to 106 percent

High voltage line in Lower Saxony

The price increase is not uniform nationwide.

(Photo: dpa)

Berlin The costs for using the electricity distribution grids are getting out of hand, at their peak they rose by 106 percent from 2015 to 2020. This is proven by an evaluation of the data from the analysis company Ene’t by the electricity provider Lichtblick. The evaluation is available to the Handelsblatt. It examines the numbers of all 880 distribution network operators in Germany.

However, the price increase is not uniform nationwide. The 106 percent mark the peak value and concern the electricity consumers in the supply area of ​​Gelsenwasser Energienetze GmbH. The average increase was 25 percent.

For an average private household with an annual electricity consumption of 3000 kilowatt hours, this means a cost increase of 47 euros per year. To classify: The consumer price index rose by 7.4 percent in the same period.

This means that network charges are developing into the main cost driver for electricity prices. They now make up around a quarter of the electricity price and are higher than the surcharge under the Renewable Energy Sources Act (EEG). The EEG surcharge only increased by 9.5 percent from 2015 to 2020.

In mid-October, the distribution network operators will announce the new network charges for 2021. Further increases in network charges are to be expected.

The network charges consist of two components: the charges for the distribution networks and the charges for the transmission networks. The Lichtblick data only concern the distribution network level.

graphic

The distribution networks, often operated by the local public utility, are the networks that bring electricity to every house. The four transmission network operators in Germany, on the other hand, build and operate the major electricity highways that transport electricity across the country. The greater part of the network charges is attributable to the distribution networks.

The transmission system operators have recently even been able to set falling network charges in some cases. For example, the transmission network operator Tennet announced a few days ago that it would reduce its network charges by 17 percent at the turn of the year.

There are various causes for the price increases at the distribution network level. On the one hand, the energy transition makes investments in the networks necessary. On the other hand, pure electricity providers without a network of their own criticize that network charges are a “black box”. Municipal utilities in particular used them to make a profit. They would keep the network charges artificially high and in return could make bargain offers for the sale of electricity.

“We urgently need more transparency about the use of the funds and a reform of the much too expensive network operation,” said Ralf Schmidt-Pleschka, coordinator of energy and climate policy at Lichtblick, the Handelsblatt. Schmidt-Pleschka also considers the large number of operators to be inefficient.

Of the 880 distribution network operators, 70 percent do not even supply 30,000 customers. “The bundling of network operations in 25 regional clusters would be a decisive step towards more cost efficiency and innovation in the electricity network,” he said.

Schmidt-Pleschka receives support from Robert Busch, Managing Director of the Bundesverband Neue Energiewirtschaft: “In the current system, network operators benefit more from inefficiently providing a service themselves than buying a service from third parties at lower cost. This also prevents efficient cooperation between network operators and cemented the expensive, fragmented structure. “

More: High-tech instead of new lines – this technology could increase the efficiency of the power grid.

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Far higher costs for the promotion of green electricity

Berlin The Energy Economics Institute (EWI) at Cologne University is not known for alarmism. On the contrary: the Cologne researchers stand for in-depth analysis, not for quick headlines.

However, what the EMI people sent out at the end of last week was short and sweet, and many politicians should have understood it as an alarm signal: the levy to promote electricity production from renewable energies according to the Renewable Energy Sources Act (EEG) “could change in the coming year 25 percent higher than today, ”said the EMI on the basis of extensive calculations.

The surcharge, which is currently 6.756 cents per kilowatt hour, could therefore “climb to 8.44 cents per kilowatt hour in 2021”. This applies even if the measures to limit the levy provided for in the federal government’s climate protection package are included, the EMI continues. Without these relief measures, the surcharge would even rise to 9.99 cents per kilowatt hour according to EWI 2021.

The Agora Energiewende think tank had similar results at the end of May. Without active political action, the green electricity levy would increase to 8.6 cents per kilowatt hour next year and thus put an additional burden on households, Agora had calculated the energy transition – and delivered the political recommendation directly: “A subsidy from the federal budget of five cents per kilowatt hour as part of the corona stimulus package could cut the EEG surcharge in half and thus relieve households from coping with the corona crisis, ”explained the Agora people.

The topic is politically explosive. For years, politicians have been trying not to let the costs of expanding renewable energies get out of hand. Even today, a household with an electricity consumption of 3500 kilowatt hours per year pays EUR 236.46 in EEG costs alone; with VAT, the amount increases to EUR 281.39. A rise of 25 percent would have exceeded the limit of EUR 350.

The total cost of EEG funding would reach a new dimension. In 2018, the so-called EEG differential costs totaled 23.1 billion euros, according to the Federal Ministry of Economics.

The hour of truth strikes in October

The business department forecasts 24.8 billion euros for 2019, and 24.2 billion for 2020. The actual figures for 2019 are not yet available. The EEG differential costs include the payments to the plant operators minus the income from the marketing of the electricity.

The moment of truth strikes in October when the transmission system operators regularly announce the EEG surcharge for the year 2021. The four companies – 50Hertz, Amprion, Tennet and TransnetBW – are legally entrusted with the collection of the levy and recalculate the amount of the levy every year.

There are two main reasons for the increase in costs. On the one hand, there have been many sunny and windy months recently, which has driven up the production of EEG electricity. At the same time, the economic downturn caused by the corona pandemic caused wholesale electricity prices to plummet.

If the wholesale price falls, the difference to the remuneration guaranteed by the EEG increases. The EEG costs rise accordingly. The EEG has resulted in more than 40 percent of the electricity consumed in Germany now coming from renewable sources.

In 2019, the figure was 42.1 percent, according to the Federal Environment Agency. The federal government’s goal is to increase this figure to 65 percent by 2030.

The EEG, which came into force in 2000, supports the expansion of electricity generation from renewable sources. The EEG guarantees plant operators fixed remuneration for each kilowatt hour of electricity produced, some of which are considerably higher than the wholesale prices for electricity.

Stabilization of electricity prices

The Federal Ministry of Economics is concerned about developments. The ministry said on request that the stabilization of the development of electricity prices was “a central concern” of the ministry as well as the entire federal government.

“We are closely monitoring the current effects of the corona crisis on energy consumption and consequently on electricity prices on the exchange,” it said. There are ongoing discussions in the ministry about “how we can solve this problem”.

The aim is to “continue to drive the expansion of renewable energies and at the same time to stabilize the EEG surcharge and electricity prices”. Especially now, when easing for the economy came into force, relief for the economy has to be taken care of. “This also includes stabilizing electricity prices,” the Ministry of Economic Affairs said.

Coalition politicians have developed proposals on how to take countermeasures. For example, Johann Saathoff, energy policy coordinator of the SPD parliamentary group, suggests that in addition to reducing the EEG surcharge from the income from the taxation of CO2 emissions, which has already been decided in principle, the electricity tax will also be reduced by two cents.

With both measures taken together, the electricity price could “drop quickly by three to four cents,” argues Saathoff. However, it must be ensured that the relief is actually passed on to electricity customers.

Lowering the electricity tax

The taxation of CO2 emissions that are not subject to the European emissions trading system was decided in the Fuel Emissions Trading Act at the end of 2019. Taxation affects the transport and heating sectors. The tax of initially 25 euros per tonne of CO2 from 2021 is intended, among other things, to relieve the burden on the EEG surcharge.

Saathoff’s proposal to additionally reduce the electricity tax should also be approved by other parties, such as the FDP.

The Greens are also insisting on relief: “We want to reduce the EEG surcharge as quickly as possible by five cents per kilowatt hour and take the funds for it from the federal budget. This would result in an increase in purchasing power of around 15 billion euros per year, ”said Greens parliamentary group Oliver Krischer of the Handelsblatt.

The EEG surcharge must be fundamentally reformed, said Krischer. Krischer focuses on exceptions for parts of the industry. “More than half of the industrial electricity is largely or completely exempt from the EEG surcharge. These companies definitely benefit from cheaper wholesale prices and benefit from the corona impact on the electricity market. That means aluminum or meat are likely to become cheaper, ”said Krischer.

The Greens politician is alluding to the EEG’s Special Compensation Scheme (BesAR). It applies to a good 2,000 delivery points in industry. Manufacturing companies that can make use of the BesAR pay a greatly reduced EEG surcharge. The relief amounts to a good five billion euros annually.

Electricity market of the future

Simone Peter, President of the German Renewable Energy Association (BEE), makes similar arguments. “The Federal Government can prevent an increase in the EEG surcharge. For this, the political leeway must finally be used.

Financing industrial privileges through the federal budget could immediately relieve the EEG levy account by five billion euros, ”said Peter the Handelsblatt. The EEG surcharge will thus be reduced by 1.5 cents per kilowatt hour.

A reduction in the electricity tax to the European legal minimum of 0.01 cents per kilowatt hour, as also demanded by SPD politician Saathoff, would reduce the electricity price by a further 2 cents per kilowatt hour, Peter predicts.

“The complex system of levies and levies in the energy sector is not necessary for this stabilization of the EEG surcharge. They can therefore be implemented quickly and stabilize the electricity price for all electricity customers, ”she said.

The expected increase in the EEG surcharge also shows that the current system of taxes, levies and taxes no longer fits into an energy world dominated by renewables. “The corona crisis is already hinting at the electricity market of the future, in which fossil fuels are less and less used, and shows that we need a fundamental reform of energy law,” said Peter.

Note: This article was published prior to the Union and SPD agreement on the current stimulus package. The federal government has now agreed to cap the EEG surcharge at 6.5 cents in 2021 and 6.0 cents in 2022.

More: Why Corona is slowing down the energy transition.

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EEG surcharge will “shoot through the roof”

Dusseldorf According to Eon boss Johannes Teyssen, electricity customers in Germany are facing additional burdens on their electricity bills due to the corona crisis. The EEG surcharge, with which electricity consumers finance the expansion of wind and solar energy, could increase more than planned.

In addition to private households, this could, according to Teyssen’s assessment, particularly affect the small and medium-sized companies and craft businesses that have been hit by the crisis. The Eon boss therefore calls for relief to limit the EEG surcharge and reduce the electricity tax. His company, which is hardly affected by the pandemic, wants to help boost the economy and invest an additional 500 million euros.

“Green electricity will be even more expensive here in Germany next year because the German support system shows its weaknesses like under a magnifying glass during the crisis,” warned Teyssen: “The EEG surcharge will be as secure as amen in the church due to the Covid Shoot 19-related faults next year. ”

Teyssen anticipates an “explosion in EEG surcharge costs” to eight cents per kilowatt hour – currently 6.8 cents. The EEG surcharge that electricity customers pay with their electricity bills would then make up more than a quarter of the total electricity costs.

Teyssen’s forecast is based on the current turmoil on the electricity market due to the pandemic and the systematics of how the EEG surcharge is calculated. With the EEG surcharge, electricity customers have to cover the difference between the fixed and generous remuneration that producers of renewable energies receive and the market prices for electricity.

IGBCE union has also warned

The wholesale price has dropped significantly in the past few months because of the corona crisis, because many industrial companies have cut back or even stopped their production. The difference between wholesale price and feed-in tariffs has increased. At the same time, record amounts of wind and solar power were fed in in spring due to favorable weather conditions.

The federal government must counteract the development and limit the EEG surcharge to a maximum of five cents – as promised in the course of the climate package decided a few months ago, the Eon chief demanded. “In connection with the introduction of the CO2 price that we support in all sectors, the government has promised to reduce the cost of green electricity by at least 1.5 cents per kilowatt hour to only around five cents per kilowatt hour,” Teyssen recalled.

Politicians must now “follow their words with powerful deeds”. “Five is the magic number,” said Teyssen. In order to limit the EEG surcharge permanently, the additional costs should be co-financed by the federal budget – for which the CO2 price would also result in higher income.

The Eon boss goes even further: “In addition, we need a reduction in the unnecessarily high electricity tax in Germany to the European target rate of 0.05 cents per kilowatt hour.” It is currently a good two cents. A private household with a representative consumption of 3500 kilowatt hours per year could be relieved by 200 euros. For a bakery with a consumption of 50,000 to 60,000 kilowatt hours, there is a relief of 3000 euros per year.

Eon boss Johannes Teyssen

Eon boss Johannes Teyssen appeals to politicians to stimulate the economy after the corona crisis and to convert it in a climate-friendly manner.

(Photo: dpa)

Teyssen is not alone in his forecast and warning. For example, the IGBCE union had already warned of an increase in the EEG surcharge to more than eight cents. “The corona crisis relentlessly discloses the problematic system of the EEG law,” said IG-BCE chairman Michael Vassiliadis.

“Electricity consumption is also increasingly becoming a social factor: strong and weaker people are equally burdened here. That must come to an end quickly, particularly in a time of economic crisis with short-time work and job losses. ”It was time for the state to accept its responsibility and to bear the costs of the energy transition through the federal budget.

Teyssen called for the economy not to be “stalled” but to be stimulated in contrast. Eon is one of the 68 companies that recently published an appeal to the German government with the “2 Grad” foundation to use the reconstruction after the corona crisis for a climate-friendly restructuring of the economy.

“We need investments, otherwise unemployment will become a reality,” said Teyssen. Eon wants to make a contribution to this. The energy company is mobilizing half a billion euros. In addition to the 13 billion euros already planned for the medium term, Eon plans to invest 500 million euros – especially in digitization and electromobility.

Eon itself – like the entire energy sector – is comparatively little affected by the corona pandemic. The electricity consumption of the major customers has decreased and the revenues in the network business are temporarily burdened, but the effect was barely noticeable in the first quarter. He was at a “low double-digit million amount,” said CFO Marc Spieker.

Eon almost doubles sales

Rather, the interim report was shaped by the acquisition of Innogy, which has now been completed. Turnover almost doubled to EUR 17.7 billion, earnings before interest and taxes (EBIT) rose by 24 percent to EUR 1.5 billion. The bottom line, however, was a net loss of 330 million euros – after a profit of 387 million a year ago.

Eon referred to the cost of integrating Innogy. There were also negative effects from the market valuation of derivatives, with which the company hedged price fluctuations. Adjusted for the special effects, the surplus rose by six percent to 690 million euros.

Eon remains cautious about the corona pandemic for the full year. “Our business model is fundamentally highly resilient, but of course not spared the severe distortions of the pandemic,” emphasized Spieker: “Due to the high level of uncertainty about the further course of the pandemic and its consequences, there can currently be only limited statements about the expected course of the 2020 financial year. “

More: Appeal from the economy: More than 60 companies call for a commitment to climate protection

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In the crisis, electricity prices and consumption fall

On Sundays, at lunchtime, electricity wholesalers regularly get hectic during these weeks. The supply threatens to significantly exceed demand. If you cannot cut your production, you have to push electricity into the market at negative prices. In addition to electricity, the customer receives ten, twenty, or sometimes 50 euros per megawatt hour – so that he can take his own systems off the grid and supply and demand are laboriously balanced.

This is also due to the currently sunny weather. The solar systems provide powerful electricity every noon. But it is mainly due to the corona crisis. With the pandemic measures, industrial production was reduced so much that around 4,000 megawatts of demand were still missing at midday on weekends – this corresponds to the output of four large nuclear power plants.

“With the high feed-in of solar power, this leads to negative prices at lunchtime on Sundays because of corona,” explains Tobias Federico, managing director of the Berlin analysis and consulting company Energy Brainpool.

The negative electricity prices at the weekend are only the most striking effect. The corona crisis is shaking the entire electricity market. Electricity consumption has dropped significantly, renewable energies cover an exceptionally high proportion of electricity consumption – and prices in short-term trading have plummeted.

Industrial customers could wake up badly in the course of the year if they are unable to completely take off the electricity they have ordered and have to sell it themselves again. On the other hand, the market also offers opportunities to stock up on energy cheaply for the coming years.

Power consumption has dropped significantly

In the past few weeks, one company after the other has shut down its factories and sent employees on short-time work. In many cases, electricity demand from large industrial customers purred to a minimum of ten to 20 percent.

According to the Federal Association of Energy and Water Management (BDEW), the total German electricity consumption was around nine percent lower than at the beginning of March, before the federal government and the federal states prescribed the harsh pandemic measures and the economy reacted with production cuts.

Temperature effects – March was exceptionally mild – could also play a role here. The effect of throttling industrial production is likely to be at least six percent: Demand on a Monday noon, when the load is usually particularly high, is currently 64 gigawatts four gigawatts lower than at the beginning of March.

The effect may seem comparatively small, but it is considerable for the electricity market: In fact, electricity demand is usually very stable – and hardly responds to fluctuations in the economy.

“Energy consumption in industry and commerce is falling noticeably,” said Eon boss Johannes Teyssen, expecting “visible traces” on the balance sheet. In return, the consumption of private households increases slightly, but the effect has hardly any impact.

The slump of dormant factories or idle trams is much greater than the additional streaming of films in the living room. And those who consume more in the home office have only shifted the demand from the office to their own house.

Electricity prices have fallen in the spot market

This is directly reflected in the electricity prices for large customers. The quantities that are no longer required are sold in the electricity wholesale spot market. “This creates corresponding price pressure,” says expert Federico. In the last week of March, an average megawatt hour cost 16 euros. In the first week of March it was 30 euros. And on ten days in March, a total of 41 hours, there were negative electricity prices.

There have been negative electricity prices in recent years. With the boom in wind and solar power, which can mainly be fed primarily into the power grid, it becomes difficult to balance supply and demand, especially on windy and sunny weekends and public holidays.

Ultimately, however, this has to succeed because there are hardly any possibilities for storing electricity. If you cannot reduce your capacities in time, you have to push electricity into the market with negative prices so that others can adjust their capacities.

In the current year there were already 133 hours with negative electricity prices. The record from last year, when it was 211 hours at the end, should be easily surpassed. The peak electricity prices fell to minus 55 euros per megawatt hour. Federico expects that many more days will be added during the corona crisis: “At least for April, but also for May, we expect the development to continue.”

Tim Steinert, Senior Consultant at the energy consultancy firm Enervis, agrees: “Our scenarios show that, depending on the duration and severity of a decline in demand, a significantly higher increase in negative prices – also in comparison to 2019 – can occur, depending on the duration and severity; that is clearly higher than expected before the corona crisis in 2020. ”

Large customers have to consume electricity

For many large industrial customers, the year could bring a nasty surprise on their electricity bills, precisely because of the low prices: Despite the fact that production is curtailed, millions of dollars are threatened. Many large customers finally secured fixed quantities at fixed prices on the futures market for this year. Those who have negotiated well can simply deduct less of the electricity booked – and the supplier bears the risk.

“But there are many industrial customers who have tolerance bands in their contracts,” says Wolfgang Hahn, managing director of the company ECG, which provides companies with energy contracts. And that’s not a good thing: it is only within these bands that it is possible to deviate upwards or downwards from the amount of electricity agreed for 2020. If you have to reduce your electricity consumption even more, you have to sell the surplus electricity on the market – and at the current prices at a loss.

“Anyone who has a tolerance of ten percent in the contract quickly gets into problems in the corona crisis,” says Hahn. After all, many companies have currently reduced power consumption to a minimum. But even with a tolerance band of 30 percent, the buffer is quickly dismantled. “The corona crisis can also be very expensive in terms of electricity costs,” says Hahn.

But the crisis also offers opportunities

However, the corona crisis also offers opportunities. The shock not only depressed quotes on the spot market, but also – albeit significantly weakened – on the futures market. The futures contract for electricity to be delivered in 2021 has since dropped from 39 to 34 euros per megawatt hour. It is thus far from the quotations from the previous year, when the prices had climbed to more than 50 euros.

“Many companies stock up on cheap prices for 2021, 2022 and also for 2023,” says consultant Hahn: “You should use the momentum.” This applies not only to electricity, but also to gas.

However, companies should take advantage of the opportunities quickly. “I don’t think the effect is sustainable,” says Hahn. When the crisis was over, prices would quickly pick up again. “I advise my customers to strike now and buy electricity and gas for the coming years.”

More: Renewable energies cover more than half of the electricity requirement

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