This chart suggests that the increase in FIT rates are offset by a decrease in wholesale power prices.
What else might explain rising German retail electricity prices?
Categories: Discussion - Distributed Energy, Energy
This chart suggests that the increase in FIT rates are offset by a decrease in wholesale power prices.
What else might explain rising German retail electricity prices?
Categories: Discussion - Distributed Energy, Energy
Prometheus Institute 
An argument has been made that some of the rising grid costs (i.e. the difference between retail rates and spot+FIT prices) should be attributed to Renewable Energy. Is it a little or a lot, and what form does it take?
The rising cost of carbon would likely be one of the major reasons for the rising prices. Last month, European Union decided to limit emission permits, creating an additional cost that the industry is passing on to the consumer.
One answer could lie in the spot market price definition. If the latter is the average over each year of the EPEX zone prices (France, Germany, Austria, Switzerland), then a decrease in spot market prices could hide the following trend:
– An export of cheap German electricity during periods of large renewable electricity production
– An import of expensive electricity when renewables aren’t producing any power.
Then the price averages could be low, but the Germans wouldn’t be the ones to benefit from it.
Interesting theory, but I am pretty sure these are German prices. If anyone could confirm, that would be appreciated.
Olivier, Germany exports when prices are high and imports when prices are low, unlike France, which has inflexible nuclear plants that cannot ramp down well, so the French prefer to sell power on the cheap when demand is low. And because their nuclear plants run full blast whenever possible, most of the country’s generating capacity cannot be ramped up to meet higher demand either – meaning that the French import (especially from Germany) when costs are high.
Not surprisingly, the price of a kilowatt-hour that Germany exported in 2012 (I have not seen the data for 2013 yet) was higher than the price of a kilowatt-hour imported:
http://www.renewablesinternational.net/german-power-exports-more-valuable-than-imports/150/537/61663/
Let me know if you need links for any of the other claims I make above; I can demonstrate each item.
Best regards,
Fabulous. Thanks, Craig!
Thanks Craig for this very interesting article. My initial guess doesn’t seem to be an explanation for rising retail prices in Germany.
It seems that the trend has changed a little in 2013 though: http://www.ffe.de/publikationen/pressemeldungen/493-deutschland-steigert-stromexportueberschuesse-um-50-in-2013
I wonder why prices in 2013 look very low (3.9c€/kWh) compared to prices in 2012 (5.6c€/kWh)…
Best regards,
The article in the European Tribune suggests that “household consumers, whom, all else being equal, end up paying higher prices to allow exemptions of big industrial consumers.” http://www.eurotrib.com/story/2013/7/2/174936/9080
This is another interesting article detailing the development of the surcharge: http://energytransition.de/2013/10/an-end-to-rising-power-prices/
This article provides a nice breakdown of the price increases: http://www.eurotrib.com/story/2013/7/2/174936/9080
The EEG-Umlage (renewables tariff) has indeed pushed retail prices up, but clearly costs for production, transportation and distribution have increased as well.
Interestly, the Umsatzeteuer (VAT) has increased not only as it applies to the production, transportation and distribution costs but also proportionately to the other tariffs applied – a tax on a tariff?
Some details about the most recent EEG-Umlage (renewables tariff) developments in Germany:
1) The German Ministry of Economics is expecting an increase of the EEG-Umlage from 6.2c€/kWh to 7.7c€/kWh by 2020. This implies an additional burden of about €10bn for non-exempt consumers.
http://www.spiegel.de/wirtschaft/service/eeg-reform-oekostrom-deal-kostet-private-stromkunden-milliarden-a-962844.html
2) Currently (2/2014), 2,098 companies are exempt from paying the EEG-Umlage, compared to 1,720 in 2013. The top 3 privileged sectors are chemicals, metals and paper. The German Minister of Economics wants to decrease this number by 500.
http://www.bafa.de/bafa/de/presse/pressemitteilungen/2014/04_eeg.html / please find the map here: http://www.sueddeutsche.de/wirtschaft/eeg-umlage-diese-firmen-profitieren-vom-oekostrom-rabatt-1.1886240 / http://www.handelsblatt.com/politik/deutschland/oekostrom-ausnahmen-weniger-unternehmen-von-eeg-umlage-befreit/9726394.html
3) The most current EU draft states that exempt companies should at least pay 20% of the EEG-Umlage, but proposes a transition period until 2018.
http://www.handelsblatt.com/politik/deutschland/oekostrom-ausnahmen-weniger-unternehmen-von-eeg-umlage-befreit/9726394.html