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Renewable Energy Sources Act surcharge remains stable, household electricity prices decrease slightly
On October 25, Germany will switch back to winter time and clocks will go back one hour. As days are getting shorter, we have to keep the lights on for longer. But even if you turn on your lights – energy-saving bulbs of course – a little earlier during the day, you don’t have to worry about running up your electricity bill as household electricity prices have gone down slightly for the first time in years.
This has to do with the fact that the costs for purchasing electricity (procurement costs) have decreased. Procurement costs make up an important part of the electricity price, and utilities pass on these costs to customers via the electricity bill.
Procurement costs are comprised of the stock market electricity price plus the so-called EEG surcharge (EEG stands for Germany’s Renewable Energy Sources Act). Procurement costs reached a record high in 2013, they have gone down for two consecutive years and are set to further decrease in 2016 (see 'direkt answers'). The EEG surcharge will remain almost unchanged next year. From 1 January 2016, German consumers will pay 6.35 cents instead of 6.17 per kilowatt-hour.
Federal Minister Sigmar Gabriel has said on the subject: "A glance at the last few years shows that we have succeeded in stabilising the EEG surcharge and even in slightly reducing the average electricity price for residential customers. Once again, consumers are benefiting from last year’s reform of the Renewable Energy Sources Act."
Reform of the Renewable Energy Sources Act (EEG) proves effective
Without the fundamental reform of the Renewable Energy Sources Act, the EEG surcharge would have increased a lot more. This is because the former Renewable Energy Sources Act was adopted back in 2000 when renewables were still in their infancy and generating electricity was far more expensive.
The feed-in tariffs for plants generating renewable energy were often extremely attractive, leading to a massive expansion of renewable energy capacity – especially of the more expensive technologies. At the same time, more and more consumers were allowed to withdraw from financing the Renewable Energy Sources Act. Some electricity-intensive companies, for example, benefitted from exemptions, and self-suppliers were granted privileges. As a result, the EEG surcharge almost doubled between 2012 and 2014 alone, rising from 3.59 to 6.24 cents per kilowatt-hour.
The revision of the Renewable Energy Sources Act undertaken in 2014 has made the expansion of renewable energy more predictable, reliable and cost-effective. Binding deployment corridors were introduced, and feed-in tariffs limited to cost-effective technologies, namely onshore wind energy and photovoltaics. And the reduced EEG surcharge now only applies to electricity-intensive companies belonging to sectors that are facing international competition and therefore depend on these exemptions to remain viable. This means that costs for funding renewables are spread more evenly.
The revision of the Renewable Energy Sources Act has helped to keep the EEG surcharge low. Meanwhile, an ever higher share of electricity is being generated from renewables. In the first quarter of 2015, renewables exceeded the 30-per-cent-mark. Now, some 32.5 per cent of electricity comes from renewable sources.
Costs for the Renewable Energy Sources Act have stabilised, but do customers benefit from this?
To some extent, it depends on your electricity supplier, as each and every utility can set their own prices. This is why residential customers should react: electricity consumers should make regular comparisons of prices and change their contract or supplier if appropriate”, recommends Federal Minister Sigmar Gabriel.
By adopting the transparency ordinance in October 2014, the Federal Ministry for Economic Affairs and Energy has also ensured that customers can get more precise information about their basic electricity supply prices. The transparency ordinance stipulates that providers of basic electricity services have to explain in detail what components their electricity price is comprised of. Making electricity prices more transparent also helps to improve competitiveness in the electricity market.
The consumer advice centres at state level, for example, can advise you on changing your energy supplier, see www.verbraucherzentrale.de. Most utilities provide information on their electricity prices online.