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German Renewables Fee Rises 47%, Opening Government Rift

German Renewables Surcharge Rises 47%, Opening Government Rift
Electric power lines and pylons stand next to a wind turbine in the countryside near Berlin. Photographer: Michele Tantussi/Bloomberg

Germany’s power grid operators boosted the surcharge consumers pay for funding renewable energy to a record, triggering a rift between two ministers in Chancellor Angela Merkel’s Cabinet.

The four grid companies set the fee paid through power bills at 5.28 euro cents (6.8 cents) a kilowatt-hour in 2013, up 47 percent from 3.59 cents now. Economy Minister Philipp Roesler wants to lower a federal electricity tax to help counter the increase, he told reporters today in Berlin. Environment Minister Peter Altmaier wants to offer consumers free advice on saving energy instead.

Merkel’s government is seeking to prevent a voter backlash against raising energy costs before the next general election in the autumn of 2013. Last week, Altmaier set out plans to cap subsidies for wind, biomass and solar power that have surged since 2004 when the government guaranteed above-market prices for electricity generated from clean sources.

Renewable energy has come of age in Germany, and “it’s time for the system of subsidies to grow up too,” Michael Fuchs, the deputy parliamentary leader of Merkel’s Christian Democratic bloc, said in an e-mailed statement. “Whoever has 25 percent of the market share must be treated as such.”

Total Subsidy

The total subsidy next year will amount to about 20.36 billion euros, which is paid for by consumers through their power bills. The fee increase will raise the bill of the average German household with 3,500 kilowatt-hours of consumption by 59 euros a year. That impact was inflated by exemptions for big industrial users and leftover costs from the previous year, the operators said.

Altmaier on Oct. 11 announced his proposal for a “fundamental” reform of the country’s clean-energy subsidy system, which has helped raise the share of renewables to 25 percent of the electricity mix. He wants to cap subsidy payments once generation capacity reaches a certain target and to offer consumers free advice on how to make their own homes more efficient, reducing consumption and bills in the process. Lowering the power tax as proposed by Roesler “doesn’t yet convince me,” Altmaier told German broadcaster ARD on Oct. 7.

While Altmaier says the country needs to take time to discuss changes to the clean-energy subsidy law, Roesler supports new legislation as quickly as possible, he said today, citing a proposal for a new model his party put forward last month.

Alarming Signal

The new surcharge is an “alarming signal,” Roesler told reporters. Altmaier’s proposal to draw up a bill after a round of stakeholder talks ends in May 2013 doesn’t reflect the urgent action needed, Roesler said. “We must act now,” he said.

Instead of blaming renewables, Roesler should cancel unnecessary exemptions for industrial consumers including banks and slaughterhouses, Juergen Trittin, co-leader of the opposition Green Party, said today in a statement. Such a move would reduce subsidy costs by 4 billion euros and push down the fee by 1 euro cent, he said.

The debate over power prices is short-sighted because Germany will save 570 billion euros by 2050 if it scraps nuclear plants, said the Renewable Energy Research Association, a group of clean-energy research institutes.

“The investments made now, at the beginning, will pay off within a foreseeable time frame and have a positive economic impact,” the group said on Oct. 10.

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