The four German transmission system operators (TSOs) today announced the renewable energy levy for 2017 of 6.88 cents/kilowatt hour (kWh), an increase of 8.3% compared with 2016. In Germany, renewable promotion is currently paid for by electricity consumers through a surcharge on electricity taken from the grid – the ‘EEG levy’. The total EEG levy cost in Germany for 2017 is expected to exceed €24 billion.

There are several drivers behind the recent increase in the cost of the levy:

• Low expected wholesale power prices at the power exchange drive an increasing wedge between market revenues and guaranteed support levels, which are fixed for 20 years of operations.
• The renewable promotion scheme has led to an ongoing expansion of renewables in Germany – total supported generation is expected to increase by 6% between 2016 and 2017.
• The increase in promotion costs is limited by a surplus on the EEG account, currently around €2 billion.
• The German Federal Ministry for Economic Affairs and Energy Frontier (BMWi) has recently published a study by Frontier (Europe) and engineering consultancy BET on the implications of introducing a dynamic renewable energy levy in Germany.

Frontier also regularly advises public and private sector organisations across Europe and globally on policy development, market design and security of supply issues in the energy sector.

For more information, please contact Miriam Rau at m.rau@frontier-economics.com or call +49 221 337 131 00.