Germany Breaks Clean-Energy Taboo In Attack On Price Surge

  • Date: 28/01/13
  • Bloomberg

Germany, adding wind and solar parks to counter falling nuclear output, proposed shifting more of the cost of expansion to producers from consumers as the government seeks to stem a surge in electricity prices in an election year. Renewable-energy lobby says new policy would “punish” investors and throw project planning into doubt.

The government may ask owners of existing renewable-power generators to take a one-time reduction in their so-called feed- in tariff of 1 percent to 1.5 percent, Environment Minister Peter Altmaier said today in Berlin. Subsidies to new projects may also be delayed to help curb costs, he said.

Germany is transforming its power market to more than triple the share of renewables in the energy mix by 2050 while phasing out nuclear generation. The scale of the energy overhaul, the nation’s biggest since World War II, has moved the soaring cost of electricity to the center of the political and economic agenda before federal elections this fall.

The government also proposed to curtail subsidies for large energy users such as steelmaker ThyssenKrupp AG (TKA) and chemical company BASF SE (BAS), Altmaier said as he outlined plans to cut the cost of the nuclear exit by about 1.3 billion euros ($1.8 billion).

The measures would “make the energy switch more just, more predictable, and ensure that consumers are protected from unexpected and excessive power-price increases,” according to the minister, who is seeking to bring them into law by Aug. 1.

Prevent Backlash

Chancellor Angela Merkel is working to prevent a voter backlash after costs for Germany’s clean-energy expansion spiraled. Consumers in Europe’s biggest economy have seen power bills climb after a fee they pay for renewables jumped 47 percent to a record 5.28 euro cents a kilowatt-hour on Jan. 1.

Altmaier proposed freezing the surcharge at the current level in 2014, and said any increase thereafter should be limited to 2.5 percent a year.

The one-time cut in subsidies for wind and solar parks would save about 300 million euros, according to the minister. Deferring subsidy payments to new generators may cut a further 500 million euros, while reining in subsidies to energy- intensive companies could bring in 500 million euros, he said.

The plans were criticized by the BEE renewable-energy lobby group, which said delaying payments for new ventures would “punish” investors and throw project planning into doubt. Reducing aid for existing generators is “legally questionable,” the lobby said today in an e-mailed statement.

The BDI industry association said Germany’s energy switch could have been better planned and implemented.

“The whole system of subsidies has to be rapidly overhauled from its roots,” BDI President Ulrich Grillo said today in Frankfurter Allgemeine Zeitung. Gas prices in Germany are now four times those of the U.S. because of the latter’s support for shale gas, Grillo said. “Industries that compete internationally cannot sustain another price rise,” he said.

Bloomberg, 28 January 2013