ENERGY MARKET
Andreas Gorski
Technologien die die Welt braucht
June 2, 2024Open Immersive Reader
What happens when planned economy ideas are incorporated into realpolitik? It leads to distortions and ultimately to absurdities. What happens, for example, when minimum prices are guaranteed to certain producers of a product that is freely priced on the market, can currently be seen in Germany. If the freely tradable prices are too low and continue to fall, taxpayers have to dig deeper and deeper into their pockets to pay these producers their minimum prices. This can currently be seen with guaranteed purchase prices for green electricity producers in Germany. It’s absurd – the cheaper the electricity prices, the more taxpayers have to pay!
Last fall, the transmission system operators expected that taxpayers would have to come up with a sum of 10.6 billion euros in 2024 to subsidize green electricity producers in order for them to receive their guaranteed remuneration. But thanks to falling electricity prices, it will probably be 20 billion euros! Taxpayers only had to support the EEG account with over 2 billion euros in April. And after just four months, half of the planned annual budget has already been used up!
The coalition needs significantly more money this year to finance the energy transition. The subsidies that the federal government has to pay to green energy producers are doubling due to the fall in electricity prices. It is “correct” that the state will have to pay up to 20 billion euros to wind and solar operators by the end of 2024 – twice as much as the grid operators had forecast in October – Economics Minister Robert Habeck told journalists in Berlin yesterday, according to Bloomberg.
The federal government’s budget problems are further complicated by the fact that there is no upper limit for green electricity subsidies in Germany. This means that green electricity producers can rake in the profits while the state covers any losses. According to the European electricity market reform, the German government must change this in the near future, but so far there have been no reform proposals from the traffic light in this direction.
The renewable energy levy, which was introduced in 2000, initially covered all sources of green electricity. However, offshore wind is no longer subsidized as this sector has become profitable. For other energy producers – especially solar energy – the main source of funding is still the EEG.
Last year, Germany added around 14 gigawatts of solar installations – more than anywhere else in Europe – which continues to drive up EEG costs. From 2023, the levy will no longer be paid by electricity customers, but by the Climate and Transformation Fund.
In Habeck’s view, EEG financing “does not causally” belong in the fund. That’s why we need to talk to each other about what part the KTF can take on and what needs to be covered by allocations from the budget.
European wholesale prices for electricity have fallen sharply over the past year and are back at a level that existed before Russia’s invasion of Ukraine and the energy crisis. The federal government must now make up the difference to ensure that renewable energy producers receive their guaranteed minimum price.
According to Fraunhofer ISE, losses of over 130 million euros have already accumulated in the EEG account in February. The shortage of money will put further strain on the difficult budget discussions within the coalition government this year, as Finance Minister Christian Lindner has ruled out additional allocations in next year’s budget and promised to adhere to the debt brake.
Although consumers and the economy could theoretically be happy about lower electricity prices, “the consequence is that this difference has to be paid now”, said Habeck, especially as the old contracts in particular are “very expensive”.
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