Cost Distribution Proposals

Feb 15 2013 Published by under European and German energy law

This post is part of a series discussing a new position paper by German Environment Minister Altmaier and Economy Minister Rösler on reducing cost of the feed-in tariff system.

The last two proposals are not about reducing costs, but about changing the way they are shared.

For one, industry special tariffs are supposed to be set higher, and the conditions for qualifying are supposed to be tightened, so as to really only help companies that need those special tariffs because they are competing on the international market.

By the way, financial privileges for companies because they compete internationally are something not viewed favorably in the WTO framework, specifically Article 3 of the Agreement on Subsidies and Countervailing Measures, but I won’t discuss this particular question in detail now.

This proposal will find support with the opposition parties. It is one of the ideas in the position paper that are likely to be actually enacted as law.

I support this as well. Energy intensive industry has profited from lower wholesale prices brought about by higher solar and wind shares in the electricity mix. They should contribute at least as much as these savings to the cost.

The other proposal is introducing a minimum surcharge for all installations for own consumption, with a threshold of 2 MW.

This is also something the Green Party wants to happen. So this is another proposal that might pass the Bundesrat and actually become law.

I am not sure about how to decide on this proposal.

On the one hand, it makes sense to broaden the base for shouldering the costs of the feed-in tariff system. And failing to do so may lead to a scenario where rising surcharges force ever more consumers out of the system, which in turn raises the surcharges for the remaining ones in a negative feed-back loop, collapsing the whole system potentially very quickly.

On the other hand, systems for self-consumption may just be the next big wave on new renewable in Germany. If the feed-in tariffs are finally too low to support new installations, the high surcharges right now make it all the more attractive to avoid paying them by moving into generating your own electricity. I recall having called this a “permanent advantage for solar” in Germany.

So having this proposal come with a threshold of 2 MW would be a good idea from my point of view. It would broaden the base for shouldering the surcharge costs, while leaving renewable installations built for self-consumption with the option of avoiding those surcharges by building smaller than 2 MW.

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