Questions & Answers

How can the cost of Germany’s Energiewende be lowered?

A number of steps have to be taken to ensure that the cost of renewable electricity is equally spread across power consumers, and the benefits of distributed power have to be utilized. Overall, Germany needs to start focusing on the cost impact of individual actions on the overall power supply.

A number of decisions have made Germany’s Energiewende unnecessarily expensive; some solutions are on the drawing board.

At present, Germany pays up to 19 cents per KWh for electricity from offshore wind farms, the highest feed-in tariff of all. However, this sector will probably also switch to auctions soon, which could produce lower prices. On the other hand, the target for offshore wind remains, thereby requiring grid expansions, which are also very expensive. Unfortunately, no study has been published comparing the current plans of more distributed renewables and less grid expansion.

Feed-in tariffs have become unnecessarily expensive with the “market bonus,” which is estimated to have cost an additional 530 million euros in 2013 without having increased renewable power production. Unfortunately, the market bonus is still included in the 2014 amendments to the Renewable Energy Sources Act (EEG).

The German electricity market also needs to be redesigned so that lower wholesale prices brought about by renewable power are passed on to consumers. Furthermore, German industry needs to pay its fair share in the switch to renewables; it already benefits from lower wholesale prices, so the exemption from the surcharge for renewables is a second benefit – and industries that do not face international competition do not need to be exempt.