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German energy transition caught in subsidies' trap


solar panels
Foto: Maurizio Gambarini dpa/lby (zu dpa 0404 vom 15.10.2009) +++(c) dpa - Bildfunk+++

Bildergalerie Siemens Pannen

In January 2013, German Environment Minister Peter Altmaier sought to land a political coup which could have become an election winner for his and Chancellor Angela Merkel's Christian Democratic Union (CDU). Almost single-handedly, Altmaier drafted legislation to cap subsidies to renewable energy producers in an effort to stop the recent steep rise in electricity bills caused by those subsidies.

Peter Altmaier

Environment Minister Altmaier is at sea about how to forge a political compromise on energy policy.

Altmaier noted that it was unacceptable that electricity customers should continue to bear all the costs of Germany's transition to green energy, which he said could amount to 1 trillion euros ($1.32 trillion) by 2050.

However, Altmaier's draft reform to the German Renewable Energies Law (EEG) foundered in the Bundesrat, the upper house of parliament, dominated by the opposition Social Democrats (SPD) and the Green party.

Soaring bills




A row of electric meters

In 2012, the rising surcharge added 70 euros to the electricity bill of an average household.

Accordingly, the surcharge on electricity rose steeply, too, increasing by 47 percent just within the last year. In a recent estimate, the government has calculated that the surcharge will likely rise from currently 5.3 eurocents per kilowatt-hour to 6.2 eurocents in 2014.

Caught in a subsidies trap




rising sun

Under Germany's EEG law, energy from renewable sources is given preferential access to the national power grid.

Mounting anger amid political stalemate

According to an opinion poll made by Forsa research group in July 2013, one out of two Germans is unhappy with the way the energy transition is being handled by politicians.

However, Germany's political parties are miles apart on finding common ground about how to curb the costs of the green energy revolution.

Merkel's CDU wants to cap the surcharge through 2014 and aims to limit its rise to 2.5 percent annually from 2015. The CDU wants to achieve this through a suspension of feed-in tariffs for new installations for some months as well as an energy solidarity tax for existing renewable energy producers.

Merkel's party also plans to reduce exemptions for power-intensive industries by 500 million euros from a total of 4.3 billion euros currently.

The SPD rejects cutting the feed-in tariffs and aims for legislation that would force power utilities to pass on lower wholesale electricity prices to consumers. In addition, they want to lower a general tax on energy and limit the number of businesses exempt from the green energy surcharge.

The environmentalist Greens want to abolish these exemptions altogether, and push for the introduction of a CO² emissions tax for conventional power plants. And finally, the pro-business Free Democratic Party (FDP) aims to drastically lower the energy tax as well as the subsidies for renewables subsidies.


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