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German Energy Lobby Wants End of Fixed Prices for Renewable Energies

German Energy Lobby Wants End of Fixed Prices for Renewable Energies
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Παρ, 27 Σεπτεμβρίου 2013 - 18:02
Germany's largest energy lobby group Friday urged lawmakers to fix the country's power market after years of generous subsidies for renewable energies have resulted in spiraling electricity costs, while bringing conventional power plants to the verge of losses.
Germany 's largest energy lobby group Friday urged lawmakers to fix the country's power market after years of generous subsidies for renewable energies have resulted in spiraling electricity costs, while bringing conventional power plants to the verge of losses.

Germany 's energy and water industry association, BDEW, called for a two-step reform of the electricity market with the aim of forcing operators of "green" power generation units to sell the electricity they produce on the market.

"Those who receive subsidies must become business people," said Hildegard Mueller, BDEW managing director.

Energy issues featured prominently in last Sunday's general elections, which saw Chancellor Angela Merkel reelected. Under pressure from consumers and industry, politicians across parties pledged to make prices and the security of energy supply a priority in the next legislative period. The BDEW's proposals are similar to those made by Germany 's most influential industrial lobby, the BDI, which last week proposed that guaranteed prices for wind- and solar-generated electricity should be abolished.

Businesses have been complaining that the so-called energy transformation--Ms. Merkel's biggest domestic policy initiative of the past four years--is driving up energy prices and costing German companies their competitive edge. The plan involves phasing out using nuclear power and fossil fuels to generate electricity in the coming decades in favor of wind, solar and other renewable sources.

Germany supports green energy by guaranteeing fixed prices for the electricity they produce, irrespective of whether that power is needed. The fixed prices are slapped on energy bills, so consumers are paying the cost.

These subsidies have fueled a boom for wind and solar power facilities, with Germany already producing close to a quarter of its electricity from green sources.

The renewables push is costly, requiring state guarantees expected to amount to 20 billion euros ($27 billion) this year alone, according to Environment Minister Peter Altmaier.

Consumer groups have also warned that the renewable energies boom has raised power prices to an extent that electricity could become a luxury good some households can't afford.

The BDEW also called for a premium on the price of electricity produced in conventional power plants, like coal- and gas-fired facilities, to encourage utilities to retain generation capacity online as backup for less-reliable renewables.

The renewables glut and a weak European economy have resulted in plummeting wholesale power prices, the prices that determine the profits that utilities make from producing and selling electricity.

Utilities have warned that the present price level means that many coal, gas and even nuclear power plants operate on the verge of making losses. Many power generators, including Germany 's RWE AG (RWE.XE) and E.ON SE (EOAN.XE), have responded by announcing power plant closures, job cuts and savings programs.

Some European countries, including France , have passed similar legislation with first auctions for new conventional power capacity expected to launch in 2016. The U.K. government is discussing a similar mechanism.

Germany will address energy policy once a new government is formed. Having lost her coalition partner in last weekend's election, Ms. Merkel is expected to form a government with the Green party or the Social Democrats, the latter being the more likely.

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