Development of the German EEG surcharge in 2014

01.07.2013

The question of how the surcharge arising from the German Renewable Energy Sources Act (EEG) will develop in the years ahead as an instrument for promoting renewable energies currently lies at the heart of energy policy discussions in Germany. The latest  analysis conducted by Oeko Institut on behalf of Greenpeace Germany comes to the conclusion that for 2014 there will be another increase in the surcharge. Experts at Oeko Institut expect an increase of approx. 0.8 Euro cents to 6.1 cents per kilowatt hour. Looking further ahead to the years up to 2017, a stabilization of the German EEG surcharge is expected after the financing deficits that have arisen in recent years for the promotion of renewable energies have been reduced.

Falling electricity prices drive the EEG surcharge

“Contrary to the assumption of the previous year that the EEG surcharge in 2014 will not further increase but rather stabilize, we are seeing an increasing trend again,” says Dr. Markus Haller, author of the report and energy expert at Oeko Institut. “The main reason for this development is the huge fall in the wholesale market price on the electricity exchange. If this price increases, the EEG surcharge decreases and vice versa.”

The explanation for this is that the EEG surcharge provides the difference between the wholesale market price on the electricity exchange and the (higher) fixed remuneration rates for electricity from renewable energies. If there is a large difference because the wholesale exchange price is falling, the EEG surcharge has to make a larger contribution – and thereby increases. The CO2 prices which are currently extremely low likewise play a role in the lower amount of the EEG surcharge since they are also an important parameter for the wholesale exchange price. According to calculations made by Oeko Institut, if carbon prices amounted to approx. 40 Euros, the surcharge would be approx. 22 per cent lower for the next year.

EEG surcharge + wholesale market price on electricity exchange = a better indicator of energy transformation costs

“The results show that focusing on the EEG surcharge alone is not sufficient to answer the key question of how the promotion of renewable energies affects the costs of electricity supply,” says Dr. Felix Chr. Matthes, Research Coordinator for Energy and Climate Policy at Oeko Institut. According to analyses conducted by Oeko Institut the sum of the wholesale market price on the electricity exchange and the EEG surcharge constitutes a far better indicator in the assessment of the electricity price development in Germany. When the falling wholesale market prices on the electricity exchange and (substantially because of this) an increasing EEG surcharge are combined, lower system costs for electricity supply result for 2014 than were the case for 2013. The pass-through of these decreasing system costs to the electricity customers proves to be one of the key challenges that has, however, largely been ignored politically.

The reduction of exemption rules for industrial electricity consumers could further decrease the burden on households in Germany – which currently for the most part foot the bill for the EEG surcharge. The study also contains recommendations for action which are relevant to both the current discussion about the surcharge and the debate about the reform of the EEG.

Oeko-Institut’s study “The German EEG surcharge and the costs of electricity supply for 2014. An analysis of trends, causes and interactions.” (in German with an integrated English summary)

Further information relating to the German EEG

Oeko Institut’s EEG calculator

Oeko-Institut’s suggestions for the reform of the German Renewable Energy Sources Act (EEG) (February 2013)

Contact

Dr. Markus Haller
Researcher
Energy & Climate Division
Oeko-Institut, Berlin office
Tel. +49-30/405085-382
E-Mail Contact
Dr. Felix Chr. Matthes
Researcher Coordinator Energy- and Climate policy
Energy & Climate Division
Oeko-Institut, Berlin office
Tel. +49-30/405085-380
E-Mail Contact