Consumers are mandated to pay the EEG surcharge with their electricity bill, and in 2019 the levy made up a staggering 21 percent of the power price paid by the average household. “Out of a 100-euro electricity bill, 53 euros are state-induced,” the German Association of Energy and Water Industries (BDEW) criticized.
The EEG levy had been introduced to support Germany’s Energiewende policy. It supports wind, solar, biomass and hydro power installations will rise by about 5 percent to 6.756 cents per kilowatt hour (ct/kWh) in 2020, up from 6.405 ct/kWh in the previous year. The latest rise comes after two years of decrease of the surcharge.
Proceeds from CO2 price to help lower EEG surcharge
Going forward, revenues from Germany’s planned CO2 price in transport and buildings will be used to lower the levy by 0.25 ct/kWh in 2021, 0.5 ct/kWh in 2022 and 0.625 ct/kWh in 2023.
Seeking to ease the burden on consumers, the German government had pledged to reduce the surplus on the EEG account, which fell by more than 50 percent over the course of the year to around two billion Euros. Already, German electricity users are paying less for renewable energy. Power grid operators consequently experienced a 7 percent drop in annual levy revenues in 2019 to 22.8 billion Euros
Still, the EEG surcharge is set to rise by about five percent to 6.756 cents per kilowatt hour (ct/kWh) in 2020. This could be its last increase as the government has promised to help lower the surcharge from 2021 using money earned through the new CO2 price in the buildings and transport sector.
“An economy minister cannot be happy about a rising EEG surcharge,” Peter Altmaier said at the time. However, the reforms of German renewables support away from set feed-in tariffs to auctions “have made expansion of renewable energy much cheaper.”