German Green Surcharge Rising 15% Can’t Catch Power Nosedive

  • Wholesale power prices dropped more than 20% in the last year
  • Consumers electricity bills have fallen every year since 2013

German consumers aren’t expected to flinch when regulators lift their green-power surcharge 15 percent beginning next year, according to an energy forecaster.

Even with overall inflation running at just 0.3 percent, an increase of the clean-power surcharge -- to as much as 7.3 euro cents ($0.08) a kilowatt hour from 6.35 euro cents -- will probably be overlooked on most electricity bills, according to Agora Energiewende. That’s because wholesale power rates are falling even faster and those savings will likely be passed on to consumers, the Berlin-based researcher wrote in an e-mail.

The report underlines the hurdles that consumers and utilities are confronting as more green power enters the grid. The influx of clean energy has flipped on its head the century-old way utilities have been doing business by allowing homes and businesses to feed energy onto increasingly congested grids. Germany’s surcharge is an attempt to encourage renewables while moderating their price impact.

Wholesale power costs dropped 22 percent, to an average 2.5 euro cents a kilowatt hour in the first six months compared with 3.2 euro cents a kilowatt hour in 2015, helping utilities keep retail power costs constant, according to Agora, according to Agora. Power from wind, solar and biomass will cover as much as 35 percent of all German power next year, up from 32.6 percent in 2015.

The current green power surcharge comprised 22 percent of average retail power costs of 28.7 cents a kilowatt hour last year. German consumers, who face the second-highest power prices in the European Union after Denmark, are being encouraged by the government to actively shop for the cheapest power available.

Retail power prices have fallen every year since 2013, according to Verivox GmbH, a data tool that compares prices offered by 832 companies. An average household consuming 4,000 kilowatt hours will pay 1,090 euros ($1,198) for power this year compared with 1,101 euros in 2015 and 1,121 in 2014, according the service.