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Germany caps green power levy with $12.5 billion injection after record EEG deficit

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Germany caps green power levy with $12.5 billion injection after record EEG deficit

Highlights

EEG levy would have risen 42% to Eur96/MWh without intervention

2020 power demand seen 8% lower, 2021 RES output at 228 TWh

Record deficit in EEG account lifts annual premiums to Eur33 billion

London — Germany's annual green power premiums require a Eur10.8 billion ($12.5 billion) cash injection from the federal budget to cap the levy at Eur65/MWh, transmission system operators said Oct. 15.

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Without this, the EEG-Umlage levy would have risen 43% on year to a record Eur96.51/MWh for 2021, the TSOs said.

Falling wholesale power prices and rising renewable energy generation has pushed the EEG account deep into deficit, lifting the estimated shortfall between premium payments to generators and income from wholesale supply to Eur33 billion for 2021.

The TSOs estimate 2021 output from renewables of 228 TWh, up 1% on 2020 estimates based on average weather conditions, requiring some Eur27.9 billion in payments to renewable energy generators in 2021.

2020 net power demand is seen some 8% lower compared to last year's estimate for 2020, mainly due to the coronavirus pandemic, the TSOs said.

Market prices were 22% below last year's estimates, which led to a Eur6 billion decline for the EEG account by end-September, monthly account data show.

An estimated Eur500 billion has been paid by German power consumers since the EEG started, with household electricity bills the highest in Europe currently around Eur300/MWh.

The EEG model meant bill payers were saddled with the high legacy costs of early wind and solar development.

These will only start to reduce in earnest from 2021, when the first 20-year feed in tariff agreements expire.

In June the German government decided to cap the EEG levy at Eur65/MWh for 2021 and Eur60/MWh for 2022.

Income for a new fixed CO2 price for transport and heat starting 2021 at Eur25/mt will also be used to offset the deficit in the EEG account.

The government estimates some Eur40 billion income from the CO2 price extension to non-ETS sectors over the next four years.

German Renewable Energy Levy (EEG-Umlage)

EEG-levy (Eur/MWh)
Annual cost (Eur bil)
2010
20.5
8.3
2011
35.3
13.5
2012
35.9
14.1
2013
52.8
20.4
2014
62.4
23.6
2015
61.7
21.8
2016
63.5
23.1
2017
68.8
23.8
2018
67.9
24
2019
64.1
25.3
2020
67.6
26.2
2021
65.0
27.9
2022
60.0
tba

Source: TSOs at www.netztransparenz.de