Electricity Price In Germany Up By Close To 1 (One) Euro A Month

There is a bit of good news from Germany. The renewable energy surcharge for next year is up to 6.354 cents per kWh. That’s the highest value in history.

Assuming a four person household using 5,000 kWh a year, that works out to around 11 Euro year in additional cost. That’s close to 1 (One) Euro per month.

Why is this good news?

That’s because higher cost gives a larger incentive to save energy. So the massive increase in cost (MORE THAN 20 CENTS A MONTH FOR EACH PERSON!!!) will mean that the days of thoughtlessly leaving the plugs of your television connected overnight are over. Come 2016, German citizens will start saving energy in earnest.

On the other hand, this good news might not materialize.

The problem is that the increase in price is caused by falling wholesale prices. The way the renewable energy surcharge works these mean a higher difference between what generators get paid and what the electricity is worth on the market.

Some utilities might refrain from passing the extra surcharge cost on, since they are saving much more than that when buying electricity on the market.

In a world wide context, Germany is a relatively rich country. Even if utilities pass the surcharge increases on, many consumers won’t notice those extra 25 cents a month in electricity cost. Rather many even don’t care enough to change their utility to a cheaper provider.

And, while the surcharges will still help increasing prices for a decade or two, after that all those solar panels will be paid off completely. But they will still produce at close to zero cost.

So while this MASSIVE INCREASE IN COST is good news in the short term, I am afraid the long term picture is much less rosy.

Published by kflenz

Professor at Aoyama Gakuin University, Tokyo. Author of Lenz Blog (since 2003, lenzblog.com).

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