Germany already lays claim to the dubious distinction of having some of Europe’s highest electricity prices, but its households will be forking over even more next year as they shoulder the costs of the country’s renewables-at-any-price energy policy, better known as the energiewende.
Berlin’s pursuit of wind and solar power in recent years has yielded dividends: German renewable energy production has tripled over the past decade. But this “success,” if you want to call it that, has come at a heavy price. Wind and solar can’t outcompete fossil fuels on cost, so in order to kickstart their deployment, the German government has offered up generous government subsidies called feed-in tariffs that offer renewable power producers long-term, guaranteed, above-market rates for their efforts.
But someone eventually has to pay for these artificial supports, and inevitably those costs roll downhill to German households in the form of green surcharges on their monthly bills. As Reuters reports, those surcharges are ticking up another 8 percent next year:
The surcharge under the renewable energy act (EEG) will be 6.88 euro cents per kilowatt hour (kWh) in 2017, up from 6.35 cents this year, the sources said ahead of an official statement from the country’s network operators (TSOs) due on Friday.
If this level is applied, an average household consuming 3,500 kWh a year will pay around 22 euros more per year, or a total of 286 euros including value added tax of 19 percent, towards the EEG. In 2016, the EEG accounts for about 22 percent of customers’ total bill.
That last bit is important to note: more than a fifth of the average German’s power bill this year has gone towards the subsidization of green energy, and next year that’s going to creep towards a quarter of the total bill. It’s no wonder, then, why power is so expensive in Germany.
Expensive power is an economic burden for a nation’s entire economy, the same way its corollary (cheap power) is an economic boost (as we’ve seen with the American shale revolution). But it’s especially harmful for a country’s poorest families, for whom a power bill will make up a much larger slice of a monthly budget than it would for wealthier individuals. In this way, costly electricity can be thought of as a kind of regressive tax, and in Germany, that tax is going to bite even harder next year than it already is.