Germany Urged to Copy Sweden’s Clean-Energy Subsidies

Germany should adopt Sweden’s clean-energy subsidy system to raise competition and contain the soaring costs of expanding solar and wind-power generation, a government adviser said.

Sweden has a quota model, which requires utilities to supply fixed levels of renewable power or buy tradable credits to make up the difference. Germany, which is phasing out nuclear reactors, hands uncapped subsidy payments to renewable projects, with aid varying depending on the energy source.

Germany must stop subsidizing clean-power generators when prices on electricity exchanges turn negative, the Monopolkommission, an agency advising the government on competition, said today in a study.

Chancellor Angela Merkel has vowed to change clean-power subsidy laws after elections due on Sept. 22. The proliferation of renewable-energy ventures has exceeded government forecasts, driving up costs for consumers. The fee Germans pay to finance such projects jumped to a record this year.

“The costs of the German energy switch can only be contained through a forceful change toward more competitive market forces,” Daniel Zimmer, the head of the commission, told reporters in Berlin. “Sweden is able to realize the energy switch at much lower costs.”

The Monopolkommission advised Germany against introducing a capacity-market program, which pays utilities to provide back-up power when demand peaks and clean energy falls short. Such payments would only raise costs further, it said, urging the government to bring its subsidy system into line with the European Union’s emission-trading program to meet climate goals.

To contact the reporter on this story: Stefan Nicola in Berlin at snicola2@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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