Michael Liebreich Error

Feb 15 2013 Published by under European and German energy law

Michael Liebreich made an error in his 2013 predictions, as Craig Morris just pointed out.

That’s very strange. Liebreich generally knows what he’s talking about. This is the CEO of Bloomberg New Energy Finance.

But he really wrote this:

The main preoccupation on the continent will be to stabilise the financial situation of the utility sector – with the big German utilities undermined by large volumes of renewable energy, and EDF still struggling to shore up the position of nuclear in Europe’s energy mix. Germany will spend the year convulsed in discussions of the “Energiewende”, or Energy Transition. Wildly popular until people realise that over half of their energy bills are driven by the cost of renewable energy feed-in tariffs and the associated grid upgrades.

How is that supposed to make sense? The surcharges have risen to now 5.28 cents euro for 2013, but that increase will only lead to about 7 percent higher retail rates.

To get to “over half” even of electricity only the surcharges would need to rise to around 15 cents, or about three times current levels, and that would still be only true if Liebreich were talking about “electricity”, which he wasn’t.

Update: In a comment to the blog post by Craig Morris cited above, Liebreich answers and says that his wording may have been lacking in precision. His main purpose was to make the point that Germany will spend the year debating the cost of the feed-in tariff system.

If so, he is coming off to a good start with his prediction, since that is exactly happening right now. I recall having posted a lot the last weeks on the new proposals on cost reduction discussed right now.

2 responses so far

  • jmdesp says:

    “associated grid upgrades” : How much did the DENA spend for grid updates ?

    This is not included in the EEG and he clearly implies that you need to also take it into account to get the true cost.

    Note that I don’t have the number, so I don’t know if what he tells is true, even adding that cost. In France the RTE cost have increased a lot in the last 8 years, but even though I still don’t have the exact numbers, I know a good part is due to people being more demanding, asking for the line to be underground, which is more expensive, and also changing lines that got old.

  • Karl-Friedrich Lenz says:

    Craig Morris in the post I linked to addresses this point, and he says that grid development investments are largely unchanged, at around 2 billion euro a year, and that grid fees have actually gone down for household costumers.

    Anyway, it would be quite impossible to come up with 10 extra cents of grid fee raises, which would be the level necessary to make Liebreich’s statement true.

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