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What is the EEG account and how does it work?

If you want to calculate your account balance, you need to deduct your expenditure from the your income. The same mechanism applies to the EEG account, which balances the funding paid out for electricity from renewables against the revenues.

It’s about balancing the income from and the expenditure on electricity from renewables

The EEG account is no different from any other bank account, with one column for income and one for expenditure. The four German transmission system operators use the account to log their income and expenditure accruing under the Renewable Energy Sources Act. On 30 September each year, the account is balanced and the balance fed into the calculations to determine the rate of the renewables surcharge that is to apply in the following year. But let us first have a closer look at the assets and liabilities:

Liabilities: remuneration for operators of renewables installations

It doesn’t matter if they use photovoltaics, wind power or biomass: all operators of installations used to generate electricity from renewables are entitled to either a fixed rate of remuneration per kilowatt hour, or a market premium, which is also calculated as per kilowatt hour. The exact amount of these payments is stipulated by the Renewable Energy Sources Act. In terms of the EEG account, they are on the liabilities side, along with the administrative cost of the scheme, which is managed by the network operators.

Assets: income from electricity sales at the electricity exchange

The electricity for which funding is granted under the Renewable Energy Sources Act is then sold at the electricity exchange and the income generated there logged on the assets side of the EEG account. At present, wholesale electricity prices are low (cf. “direkt finds”), which means that less is being paid into the EEG account than at times when prices are high.

The renewables surcharge – designed to close the gap between income and expenditure

The renewables surcharge was introduced to close the gap between the remuneration to which operators are entitled and the income generated at the electricity exchange. Put differently, the surcharge closes the gap between expenditure and income, thereby providing the funding for the expansion of renewables. One of the key factors used in the calculation of the rate of the surcharge that applies in the following year is the annual account balance. Calculating this is necessary, because it is rare for the annual income and expenditure to exactly match. Every year, the account balance for this year is used to calculate the rate that applies in the following year. This means that a positive balance will result in the surcharge for the following year being lower and vice-versa.

Positive account balance means lower surcharge

The account was balanced just a few weeks ago. As of 30 September 2016, the balance was positive, standing at close to +2 billion euros. This means that the rate for next year can be lowered by almost 0.6 cents per kilowatt hour. In the case of the EEG account, you can be sure that any profits or gains on interest will be fully paid back to consumers.