Berlin Federal Minister of Economics Peter Altmaier (CDU) has announced further reductions in electricity prices. “My goal is for us to gradually lower the EEG surcharge over the next five years and finally abolish it entirely,” said Altmaier on Thursday at the Handelsblatt Energy Summit. The acronym EEG stands for the Renewable Energy Sources Act, which was introduced 20 years ago to promote green electricity.
After months of struggle, the coalition passed a reform in December, but failed to clarify important points. A new expansion target for renewable energies by 2030 that meets the new EU climate targets is still open. The question of how much electricity Germany will probably need in 2030 is also open.
Encouragement for Altmaier’s plan to phase out the EEG funding comes from the energy sector: “The EEG has been incredibly successful with its 20-year history, but the system of the levy and levy system makes competitiveness difficult,” said Kerstin Andreae, Chair of the Federal Association of German Energy and Water Industries.
EnBW boss Frank Mastiaux is also expecting a lot from a further EEG reform: “The problems have been identified”, now it depends on the implementation, said the manager at the energy summit. Above all, the expansion of wind and solar systems must increase significantly, “otherwise we will not achieve our climate goals”.
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Green leader Annalena Baerbock, however, expressed skepticism. First of all, the competitive conditions for renewables would have to improve. This also includes a reasonable CO2 price. According to the plan, this should initially amount to 25 euros per ton from 2021 and gradually increase to 55 euros per ton by 2025. That is not enough for Baerbock, she calls for a significantly higher CO2 price and a climate neutrality pact between business and politics.
Federal Minister of Economics Peter Altmaier and Greens boss Annalena Baerbock are something like regular guests at the annual Handelsblatt Energy Summit. The focus is on your messages – not least because the first black-green ocoalition at federal level could be initiated next autumn after the federal elections.
While the two politicians agree that ‧ those companies will be left behind that do not take the issue of climate neutrality so seriously, but they are far apart on other issues.
“If we electrify everything, not just the transport sector, but also industry, then of course we have a much higher power requirement than we currently have or it was the case five years ago,” said Baerbock at the Handelsblatt Energy Summit , which took place purely virtually this year due to the corona pandemic. “That is why the amounts of expansion that Mr. Altmaier has submitted are definitely not sufficient.” She accuses the Federal Minister of Economics of “calculating”.
With his announcement that the Renewable Energy Sources Act (EEG) will expire in the foreseeable future, the CDU politician is likely to meet with a lot of approval from large parts of the economy and society. Because the EEG, which was introduced to promote electricity generation from renewable energy sources such as sun and wind and once made Germany a pioneer in the field of energy transition, has cost consumers and companies a three-digit billion sum over the years.
Thanks to government support, there were more wind turbines and solar systems in Germany for a long time than in any other country in the world. In the meantime, however, the former pioneer is more in the lower middle field than in the top positions in a global comparison.
The expansion of wind and solar power is only progressing slowly, while electricity costs continue to rise due to the EEG surcharge. With the new climate targets from Brussels, the costs of the energy transition should also go up even further. “We have to guarantee that energy is affordable, even if renewables become the main source of electricity and energy,” said Altmaier on Thursday.
Altmaier wants planning security
In 2020, the grand coalition decided in the economic stimulus package to cap the EEG surcharge for 2021 and 2022 via budget funds and the CO2 price for fossil fuels that has just been introduced in the building and transport sector, in order to ease the burden on electricity prices. Altmaier said at the energy summit that he would like to continue this relief in order to create planning security. “If someone makes investments as a medium-sized company, then he would like to know whether he can still pay for the electricity in ten years,” said the minister in a video link. “That’s why we need this clarity.”
When it comes to electricity prices for medium-sized companies, industry and households, Germany should “return to the means of the European convoy,” said Altmaier. “The acceptance of electricity prices is an important prerequisite for the energy transition and climate protection to succeed.”
Altmaier received direct support for his initiative from the energy sector itself. “The EEG was designed to successfully implement a market ramp-up. Now we need a market-driven solution, ”said Stefan Dohler, head of the north German energy supplier EWE. The head of the Oldenburg company sees this in the so-called “Contract for Differences” (CfD) model, which is already being used in Great Britain and other countries. With the CfD system, the price is capped upwards and downwards. The operator is covered if the stock exchange prices fall below the limit, but the profits are also capped and transferred to the state if they are significantly higher.
In view of a similar discussion, the Federal Ministry of Economics had already shown itself to be rather critical of the model with regard to offshore wind power. Instead, Altmaier relies on direct purchase agreements between producers and consumers, so-called Power Purchase Agreements (PPAs), which guarantee a fixed purchase price over several years.
Since the costs of solar and wind power have fallen massively, PPAs have been concluded more and more frequently, often without any additional remuneration from the state. “Yes, there has been fighting over the past few years between those who believed they could or should stop the train, those who argued for a reasonable pace, and those who weren’t fast enough,” said Altmaier. Now everyone would know that if you “don’t march ahead when converting to a fossil-free world, you will end up being caught up and rolled over”.
How much green electricity does Germany need?
However, there is still one point that the Minister of Economic Affairs cannot ignore: How much green electricity does Germany really need to achieve its climate targets by 2030 and beyond? Like the Greens leader Baerbock, a possible candidate for Chancellor of the Greens in the upcoming federal election, other experts also warn that the federal government is setting the required amount far too low.
Electric cars, heat pumps and also low-carbon industrial production will drive up the demand for electricity dramatically. EWI experts estimate gross electricity consumption in 2030 to be up to 748 terawatt hours (TWh). The federal government, on the other hand, has so far anticipated a significantly lower demand for electricity.
“We will solve that in the first quarter,” announced Altmaier. With around 45 percent, Germany has achieved the highest share of renewable electricity to date. Alternative energies would have a meaning that they had not previously had. Germany wants to become climate neutral by 2050. Altmaier committed to a 100 percent supply of Germany with wind, solar and co. The intermediate step is a share of 65 percent by 2030.
“I am convinced that we will have German electricity production climate-neutral by 2040,” said Altmaier. At the same time, he was convinced that the share of 65 percent renewable energies will not only be met by 2030, but will probably be exceeded. If the expansion continues so slowly, however, it will be difficult.
Green politician Baerbock therefore calls for “to pack a solar system on every roof”, that is, solar compulsory for new buildings. The public sector, according to Baerbock, could start right away so that “we can finally make progress with the expansion of renewable energies”.
Federal Environment Minister Svenja Schulze (SPD) also declared the 65 percent share of renewable energies by 2030 to be outdated at the Handelsblatt Energy Summit on Wednesday. The reason is the new EU climate target that the EU heads of government agreed on in December. Greenhouse gas emissions in the EU will probably have to fall by at least 55 percent compared to 1990 levels by 2030. A final agreement between the Council of Ministers, the EU Parliament and the Commission is still pending. The previous plan was 40 percent.
What this means in concrete terms for Germany is still unclear. The EU climate target does not apply across the board to all member states, at least at the moment: As part of the burden sharing within the EU, each state receives its own target value, which is essentially based on the performance of the respective country. So far, Germany has had an obligation to reduce greenhouse gas emissions by 55 percent by 2030.
Economy Minister Altmaier openly expressed himself in favor of an increase on Thursday. The “friends” of the CDU had spoken out in favor of an increase to 60 percent. “I expressly support that.” He sees momentum not only in the energy transition in Germany, but globally in protecting the climate. The new US administration under Joe Biden is “an opportunity for all of us”.
When asked about a possible black-green coalition after the federal election in autumn, Altmaier said he warned against assuming that the coalition partners had already been decided. Baer‧bock declared that she was fighting for a higher CO2 price, but not for black and green as an automatism. The Union, she said, was always lagging behind. “That’s why we Greens want to get into the lead position.”
More from the Handelsblatt Energy Summit: Whether the climate-neutral restructuring of the economy will succeed will be decided in the next ten years.