The 2012/11/28 at 09:00
Marie Luginsland, in Germany
In mid-November, all German households received letters from their electricity suppliers, informing them of a 38.60 % rise in the price per kWh from 1 January onwards. These consumers, who buy the dearest electricity in Europe*, will also have to pay, as provided for by the Renewable Energies Bill dating from 1 January 2009, a new tax to finance Germany’s change in energy sources. By 2020, renewable energies are to make up 35 % of German electricity, with the figure reaching 80 % in 2050, as opposed to 20 % today.
Householders will not be the only ones to have to bear the brunt of subsidising renewable energies, namely wind, photovoltaic and biomass energies. Companies will also be fully hit by the effects of the energy policy aimed at finding a replacement for nuclear energy. This subsidy, totalling 20.4 billion euros, will have an impact on electricity bills next year, in the form of a 47 % increase of the current tax of 3.60 cents per kWh!
Competitiveness under threat
The branches that consume the most energy are bracing themselves for things to get even worse. In 2013, Germany’s steelworks alone will have to pay an extra 260 million euros as a result of the Renewable Energies Bill!
The chemicals industry, the industrial activity most dependent on electricity, is expecting a 500 million euro rise in its production costs. “Pressure is mounting even though we already paid 1.7 billion euros this year to subsidise renewable energies,” indicates Martin Kneer, Secretary General of the Federation of Metal Producers and Spokesperson for the EID (Germany’s Association of Energy-Intensive Industries, representing 830,000 employees **).
True, these industries that consume over 10 GWh per year can request exemption from the tax on grid usage. But they consider this exemption – representing 1.1 billion euros this year – inadequate compared to the price jumps awaiting them.
Employers’ federations and unions from this branch have addressed a joint letter to the Chancellor, demanding a limit to be placed on these extra costs and an “energy pact for the country”. Today, these German industries already pay the highest electricity rates in Europe (10 cents per kWh for annual consumption of 70 to 150 GWh), accounting for 21 % of their costs. Now fearing for their competitiveness, they are requesting a reform to the Renewable Energies Bill. Dialogue on this topic will take place within the government coalition by May 2013 and may result in regional price differences.
By that time, householders and companies will already be facing increases in electricity bills. But the new German energy policy will also have less visible and less immediate effects. By imposing quotas on renewable energy sources in production, the bill profoundly overturns economic structures. In this way, as revealed by a survey carried out by the Centre for European Economic Research (ZEW), all sectors of activity will be affected by this change in direction for energy. The upshot is that only the energy and financial services sectors will benefit from the development of renewable energies.
Other activities will be penalised in more than one way. In this way, in the state of Baden-Württemberg, the mechanical construction sector, reliant on many SMEs, is set to suffer from this energy policy. As pointed out by Peter Heindl, Researcher at the ZEW and co-author of the survey, “according to our forecasts, the reorientation of investments and public spending towards renewable energies will penalise mechanical construction as well as many other sectors. As a result, production will fall and jobs will be cut.” In his opinion, two other factors also need to be taken into consideration: “the increase in electricity prices that will directly weigh on companies in coming months and the ensuing loss of income that in the long term will cause the investments of these same companies to be a burden.”
* 25.3 cents per kWh compared to a European average of 18.2 cents.
* *Six trade federations are members of the EID (construction materials, glass, paper, metal, steel and chemicals).