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Steep German Electricity Price Rise fuels controversy over Erneubare Energien-Gesetz (EEG) and Industry Subsidy

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Germany’s Erneubare Energien-Gesetz (EEG) Law

Germany is one of the largest generators of renewable energy in the world being the  No.1 producer of solar power and is a top 5 producer of wind energy as well. The country’s EEG law enacted in 2005 has led to a massive increase in green energy capacity due to the favorable feed in tariffs given to clean energy producers. Millions of German homes have installed solar panels on their roofs as the subsidies have given a reasonable payback period for green energy production. Germany is also one of the leading companies in offshore wind energy farms and has a massive green industrial base. However the Fukushima disaster and the resultant public backlash forced the Merkel Government to abandon nuclear energy. This has led to big questions about the country’s current and future energy policy, as the leaders have to decide on how to fill the massive gap as nuclear power shuts down.

There has been furious debate about the role of Erneubare Energien-Gesetz (EEG) as the consumer surcharge on electricity for funding renewable energy is set to rise sharply in 2013. The surcharge is set to rise by almost 50% to 5.3c/KwH from around 3.6c/Kwh currently. The so-called ‘Umlage’ — charges levied on German consumers to support renewable power – will fund the 20 billion euros that will be paid out for green energy in 2013. Opposition parties have accused the government of letting private consumers bear the brunt, after it exempted energy-intensive heavy industry from green energy and network usage tariffs.

While the media is criticizing the renewable energy industry, wind and solar energy associations have hit back citing the massive amounts of damage caused by fossil fuels and the energy security due to renewable energy. BWE has cited that the electricity price increase has been less than the rise in fuel costs such as oil. The states and the federal government are also not aligned and are working at cross purposes. Merkel has called for a meeting to come to an agreement about German’s Energy Policy and the role of Renewable Energy. Note large investments will be needed not only to increase green energy capacity but also the power grid.

German Nuclear Power to shut down in 2022

Germany which has seen the biggest anti-nuclear protests after the Fukushima disaster has decided to completely switch off nuclear power by 2022. In the aftermath of the Nuclear Accident, Germany had temporarily shut 7 of its nuclear reactors none of which is going to be reopened. The other nuclear reactors will also will be completely mothballed by 2022 when their normal life ends. This is a huge death blow to nuclear energy as Germany had one of the largest installed capacities of nuclear power. Switzerland and Japan have killed nuclear energy as well after the catastrophic loss from nuclear power which led to radioactive rain in Seoul, deathly radiation in parts of Japan and the evacuation of 20 kms area from the site of the nuclear plant of TEPCO.

BWE response

Next year the cost of energy is set to rise but, say BWE, this is only partly due to the increase of renewable energy paid through the EEG. One-quarter of the cost of the EEG can be attributed to the fact that heavy industry doesn’t pay its full contribution into the EEG – they only pay the full contribution for the first million kilowatt hours of electricity they use, after that they pay just 10%.More importantly, the price rises pale in comparison to the price hikes in petrol and oil for heating. In 2000 the average German household paid €109 a month for petrol, €95 a month for oil for heating and €63 per month for electricity (which includes the EEG contribution). In 2012, according to a German government study, these rise to €116 a month for petrol, €105 a month for oil and €65 for electricity. Just €10 of that €65 is the cost of the EEG contribution.

EEG Increase in 2013

Germany’s surcharge for renewable energy will rise by almost half next year, a government source told Reuters on Wednesday, intensifying the burden for consumers from the country’s shift away from nuclear power.The 47 percent increase reflects the fact that renewable sources are providing increasing amounts of electricity, which is bought from producers at guaranteed prices above market rates.

Merkel Meeting

Chancellor Angela Merkel held talks on developing a nationwide strategy on renewable energy with the governors of Germany’s 16 states on Friday, at a time when energy prices are rising and the opposition is critical of her government’s efforts.

The opposition Social Democratic Party has pounced on the weakness in the Merkel government’s signature project ahead of national elections next year, while widespread public support for the plan faces strains from a nearly 50 percent jump in a consumer tax for the transformation next year.

Also Read about German Solar Panels.


Sneha Shah

I am Sneha, the Editor-in-chief for the Blog. We would be glad to receive suggestions, inputs & comments on GWI from you guys to keep it going! You can contact me for consultancy/trade inquires by writing an email to

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