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Renewable energy surcharge

Going off-grid might mean staying on grid in Germany

An upcoming ruling may allow Germans to get around the renewable energy surcharge without going off-grid. In other news, the number of industrial firms exempt from the renewable energy surcharge was announced just before Christmas.

Germany has a “clearinghouse” for matters relating to the Renewable Energy Act (EEG), and it is currently looking into the conditions under which the renewable energy surcharge should be applied to power consumed directly if someone is completely off-grid. Note that the law does not speak of not having a grid connection, but rather that “the party produces all of its electricity itself from renewable energy and does not receive any financial compensation for any electricity not consumed directly” (my translation of para 2, sentence 3). In other words, the party does not receive feed-in tariffs and does not export excess power to the grid.

Apparently, a grid connection might nonetheless be possible. The question is now whether no power is purchased from the grid or whether such consumers should be allowed to purchase 100 percent green electricity from the grid. In the former case, the law would dramatically slow down grid defection by requiring parties to consume 100 percent of their power directly. As we have previously discussed, 30 percent is quite a high level for households, for instance, and anything above that requires expensive battery systems that make this option unattractive.

But households are exempt from the renewable energy surcharge anyway. Businesses with greater power consumption and larger arrays will therefore want to pay attention. Companies can far more easily consume all of their solar power directly (again, see the link above), but they would still remain reliant upon the grid for much of their power consumption.

If such firms are allowed to get around the renewable energy surcharge, which currently stands at around 6.2 cents per kilowatt hour, by purchasing 100 percent green power from the grid and otherwise consuming all of their own renewable electricity directly, the result is most likely to be massive grid defection. In the most extreme case, a business that covers only a small fraction of its power consumption from a solar roof could simply switch to a 100 percent green power provider. If it still pays the retail rate (like a small business would), the power price would drop from the current level of around 29 cents to around 23 cents. A larger business that pays the highest industry rate would see its power price fall from 15 to 9 cents. This policy interpretation would thus potentially be bigger news than any explicit change from 2014.

Industry exemptions

In other news, BAFA announced in mid-December (press release in German) that 2,615 grid connection points for industrial firms will be largely exempt from the renewable energy surcharge in 2015. A total of 1,983 companies are affected. (A firm can have more than one grid connection.)

Last year, the number of companies was a bit higher at 2,026, while the number of connection points was significantly higher at 3,414. The biggest increase may have come from railway operators; 127 of them are now largely exempt, compared to 72 in the previous year.

The total number of electricity concerned fell from 170 to 103 TWh, roughly a sixth of gross power generation in Germany. The value of these exemptions is estimated at 4.5 billion euros. None of these figures are final, however. The list of firms is to be published along with additional explanations and categorizations by industry this month.

Firms that are largely exempt from the renewable energy surcharge do not pay the full 6.2 cents per kilowatt-hour, but only a fraction of that amount, which can drop as low as 0.6 cents.

(Craig Morris / @PPchef)