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.