New German govt to end renewables levy in 2023

The new German government plans to abolish the renewables surcharge, the so-called EEG-levy, paid by consumers with their electricity bills, at the beginning of 2023 in order to relieve the burden on consumers amid rising electricity prices.

The EEG-levy is meant to finance the expansion of renewable energy in Germany and cover the difference between the market price and the market premium paid to electricity producers and after its abolition, the renewables offensive will be financed with the proceeds from the emissions trading systems (BEHG and ETS) and a subsidy from the federal budget, shows the coalition agreement published on Wednesday.

The elimination of the EEG-levy is not surprising. In October, the Federal Network Agency cut the surcharge for next year by almost 43% to a ten-year low of EUR 0.0372 (USD 0.042) per kWh as rising spot prices of electricity reduce the need for subsidies for renewables. In 2021, the levy was capped at EUR 0.065 per kWh.

The EEG-levy and federal subsidies next year will total EUR 20.1 billion, covering the difference between what the country's transmission system operators will need to pay for green energy -- EUR 33.7 billion -- and the expected electricity exchange revenues of EUR 13.6 billion.

Under the new coalition agreement, which envisages reaching 200 GW of solar and 30 GW of offshore wind capacity by 2030, the funding of renewable energy will be stopped with the completion of the phase-out of coal set for 2030.

(EUR 1 = USD 1.122)

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