Brochure Electricity Costs Bf

7/27/2019 Brochure Electricity Costs Bf

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ElEctricity romrEnEwablE

EnErgy sourcEs

w e ?


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imPrint

I M P R I N T

Published by: Federal Ministry or the Environment, Nature Conservation and

Nuclear Saety (BMU)Public Relations Division 11055 Berlin GermanyE-mail: [email protected]: www.bmu.de/english and www.erneuerbare-energien.de

Editors: Dr. Michael van Mark, Dr. Wolhart Drrschmidt,Division: General and Fundamental Aspects o Renewable Energies

Technical revision: Dr. Bernd Wenzel, Ingenieurbro r neue Energien (ine), Teltow

Design: design_idee, bro_r_gestaltung, ErurtPrinting: MKL-Druck, Ostbevern

Photos: title page: Tetra images/vario imagesp. 6: Ridder/1 onlinep. 13: J. Eckelp. 15: D. Gust/gustotop. 17: Brigitte Hiss/BMUp. 19: Brigitte Hiss/BMU

p. 20: W. Ottop. 22: Brigitte Hiss/BMUp. 25: R. Kleinhempelp. 27: Brigitte Hiss/BMUp. 33: Brigitte Hiss/BMUp. 36: K.-B. Karwasz/teamworkp. 37: Brigitte Hiss/BMUp. 38: Bernd Mller/BMUp. 40: Oberhuser/BMU

p. 42: ChristianeEisler/transit

Date: April 2009Second edition: 7.500 copies
mailto:[email protected]://www.bmu.de/englishhttp://www.erneuerbare-energien.de/http://www.erneuerbare-energien.de/http://www.bmu.de/englishmailto:[email protected]


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C O N T E N T S

i ..................................................................................... 4

Ee eee ee e epee? ............ 6

w e ee ? i e ee ............................................................... 7

Pe pe e ee ..................................... 11

Electricity generation and transport ....................................... 11

Taxes and charges ................................................................... 16

Promotion o combined heat-and-powerand renewable energy ............................................................. 18

w e e EEg ee e? .............................. 26

w e ee pe epe pe? ................... 27w EEg e e ............................................ 33

reee ee e eef, epee pe ................... 37

se e e ..................................................... 40

i e e iee ............................................. 43


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I N T R O D U C T I O N

What impact do renewable energy sources have on electricity pric-es, which have been rising or years? This brochure provides answersto this question and explains the situation on the German electrici-ty market.

The central actor is the success o the German Renewable EnergySources Act (Erneuerbare-Energien-Gesetz EEG). The Act has madea major contribution to the act that around 15 percent o the elec-tricity produced in Germany comes rom renewable energy sources.This is a substantial increase on previous years. In the electricity sec-tor alone, the Act succeeded in reducing our CO

2emissions in 2008

by about 75 million tonnes. Together with the heat and motor uelsectors, total savings o CO

2due to renewables in 2008 came to near-

ly 115 million tonnes.

The proportion o household electricity prices due to the EEG is cur-rently about 5%, and this is not likely to show any marked increasein the uture. In view o the central role that renewable energies


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play in eorts to mitigate climate change, this is an appropriate con-tribution: The Federal Governments recently rearmed intention toexpand renewable energy in the electricity sector (at least 30 percento electricity consumption by 2020, and steadily increasing there-

ater) is an important precondition or ensuring that Germany canachieve its ambitious climate change mitigation targets.

But we should not orget that renewable energy sources also haveconsiderable economic benets. They increase competition on theelectricity market, reduce situations o dependency and the econom-ic risks o rising raw material prices, and they stimulate innovation,

investment and employment. Today renewable energy sources are al-ready providing jobs or some 280,000 people in Germany which isa rise o about 120,000 jobs in only our years.

Investment in renewable energies paves the way or Germanys ener-gy uture. Together with improved energy eciency it lays the oun-dation or sustainable, secure and aordable energy supplies.


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ElEctricity rom rEnEwablE EnErgy sourcEs too ExPEnsivE?

We regret to announce that owing to cost increases arising romthe promotion o renewable energies and third-party electricity price

rises we are orced to raise our own electricity prices with eect romthe beginning o next year. This tends to be the message o the let-ters that electricity suppliers send their customers towards the end

o the year and o ocial statements by the electricity industry. Andit requently creates the impression that electricity rom renewableenergies is a major source o the price rises we have been seeing oryears now in the electricity sector.

But is this really the case? What items go to make up the price o

electricity? What share is due to the Renewable Energy Sources Act

(EEG)? And above all: are renewable energies really the main reasonor soaring electricity prices? This brochure sets out to explain andinorm, and to throw light on the bewildering conusion o physicallaws, specic energy-sector conditions and environmental aspects.And, to come straight to the point: it makes it clear that renewableenergies are by no means the main actor responsible or electricityprice rises.


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what doEs ElEctricity cost?inormation on thE ElEctricity industry

A variety o components go to make up the price o electricity. Be-ore we explain them in more detail on the ollowing pages, the ta-ble below oers an initial overview o the individual price compo-

nents and the actors that cause them. Among other things, the

table shows that the costs o promoting renewable energies un-der the Renewable Energy Sources Act (EEG) are not public taxes orcharges. The EEG surcharge does not go to the state, but to the oper-ators o EEG plants. The EEG merely establishes a ramework or theprivate-sector relations between EEG plant operators and the grid op-erators and/or electricity suppliers.

goes to

Revenue from:

Energy Plant Federal Lnder Cities and Pensionsuppliers operators authorities municipalities insurance

under EEG/KWKG

Power generation

TransportDistribution

Measurement

EEG surcharge

KWKG surcharge

Concession charge

Electricity tax

VAT

The electricity sector distinguishes two groups o customers:

those who pay the general household rate, and customers with spe-

cial terms. Both the absolute level o electricity prices and the rela-tive importance o the cost components listed above show considera-ble variations between general household-rate (tari) customers andspecial-contract (non-tari) customers.


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Tariff customers use electricity primarily or their own consumptionin the home, or at least need less than 10,000 kilowatt-hours a yearor proessional, agricultural or business purposes. Their share o to-tal German electricity consumption comes to about 25%.

As a rule the household tari is made up o a xed basic price permonth and a consumption-related price per kilowatt-hour, which ismade up o the price components explained below. Whereas gridees have been regulated since 2005 by the Federal Network Agency

and the regulatory authorities in the Lnder, approval o electricityprices by the regional authorities (Lnder) was discontinued in 2007.

These prices are however subject to regulations under competitionlegislation. An amendment to the law on Restraints o Competitionintroduced especially stringent supervision o price abuse or the en-ergy sector or a limited period until 2012.

Customers are not normally ree to negotiate general household tar-is or electricity with the electricity supplier. They can however

switch to a dierent supplier, subject to the relevant periods o no-tice, in order to secure a better price or exert infuence on the sourceo the electricity (c. page 31 with inormation on Green power).Price comparisons are available on the Internet rom various pro-viders (see also Inormation available on the Internet at the endo this brochure). To see how prices at the average household tari1have developed in Germany, see the diagram on page 9.

Non-tariffcustomers are usually electricity customers who consumemore than 10,000 kilowatt-hours a year or proessional, agricultur-

al or commercial purposes and who have their own multi-rate meter(Energy Management Act Energiewirtschatsgesetz Section 3 (22)).They negotiate with the supplier an individual electricity price thattakes account o special aspects such as total annual consumption

or the distribution o power requirements in the course o the day.There are great variations in contract structure, duration and prices,all o which or this reason are usually treated as condential.

1 The household tari is normally based on two components: a monthly basic rate and a chargeper kilowatt-hour consumed. This results in a consumption-related combined price per kilo-watt-hour, which decreases as consumption increases. The diagram shows the combined priceor a household consuming 3,500 kWh a year.


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5

10

15

20

25

5,0

10,0

15,0

20,0

25,0

Cent/kWh

2000 2002 2004 2006 2007 2008

Value-added tax

Generation, transmission, marketing

Heat-Power Cogeneration Act Renewable Energy Sources Act (EEG)

Concession charge

Electricity tax (eco-tax)

14,316,1

18,0

19,420,7

21,6

d: ee a e Ee we ie (bdEw), e

Major non-tari customers also prot to a considerable extentrom special concessions under the Renewable Energy Sources Act(Erneuerbare-Energien-Gesetz EEG), the Heat-and-power Cogen-eration Act (Krat-Wrme-Kopplungs-Gesetz KWKG) and the Electric-ity Tax Act (Stromsteuergesetz StromStG). In addition, the Concession

Charges Ordinance (Konzessionsabgabeverordnung) provides relie ormajor electricity consumers (see box on page 10).

The average price or non-tari customers in 2007, as determined bythe Federal Statistical Oce, was 8.6 cent per kilowatt-hour (exclud-ing value-added tax). This gure is heavily infuenced by large non-tari customers with very avourable electricity prices. However, the

price paid by the majority o non-tari customers is considerablyhigher than this statistical average.2

This brochure does not consider the individual electricity prices paidby non-tari customers. Instead, the explanations and gures ocuson general household-tari customers, i.e. mainly private homes, but

also small businesses and services.

2 For example, non-tari customers who consume 125,000 kWh per annum and have a connectedload o 100 kilowatt (kW) pay an average o 14.6 cent per kilowatt-hour excluding value-added tax.


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ree - e

The Renewable Energy Sources Act (EEG) contains a specialcompensation provision or particularly energy-intensive enter-prises in the production sector and or railways. They can apply to

take a much reduced quantity o EEG electricity; based on an EEGlevy o only 0.05 cent per kilowatt-hour.

The Heat-and-power Cogeneration Act (KWKG) also lays downa much reduced surcharge as compensation or energy-inten-sive enterprises. For nal consumers with an annual electricityconsumption o more than 100,000 kilowatt-hours (kWh) per de-

livery point it is a maximum o 0.05 cent per kilowatt-hour orthe portion that exceeds the 100,000 kWh threshold. I electric-ity costs accounted or more than 4% o sales revenue in the pre-ceding calendar year, the surcharge or the quantity exceeding100,000 kWh is reduced to as little as 0.025 cent per kilowatt-hour.

Revenue rom the Electricity Tax Actis largely paid into the statepension scheme, where it helps to stabilise the level o contribu-tions. This reduces the burden on business that is due to the em-ployers contribution to the pension scheme. Without the electric-ity tax the present contribution rate (19.9% since 2007/1/1) wouldtoday be 1.7 points higher, at 21.6%. However, electricity-intensiveoperations in the production sector oten derive little benet romthis reduction in the employers contribution, since their person-nel costs only account or a small proportion o total costs by com-parison with other industries. In such cases the ollowing compen-sation arrangement applies: i the electricity tax, ater deductiono a minimum amount o 512.50, exceeds the saving on pensioncontributions, the company has to bear only 5% o the remainingadditional cost.

In the case o the concession charge, non-tari customers basi-cally pay a reduced rate o 0.11 cent per kilowatt-hour. What ismore, this charge does not apply at all i the mean annual elec-tricity price paid by the non-tari customer is less than the aver-age price (see above). However, towns and municipalities may alsoset higher threshold prices and thereby deliberately exempt busi-nesses rom paying the concession charge.

The Grid Access Fees Ordinance (Entgeltverordnung r den Zugangzum Stromnetz Strom-NEV) permits a reduction o up to 50% com-pared with normal grid ees i the customers annual power con-sumption is over 10 GWh and the total annual operating hourscome to more than 7,500 hours, i.e. the customers demand orelectricity is very high and steady.


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PricE comPonEnts o housEhold ElEctricity

The EEG is only one o eight price components that go to make upthe price o household electricity. These components can essentially

be classied in two categories: electricity generation (including trans-port and marketing), and taxes and charges. The KWKG and EEG sur-charges which are shown separately in the ollowing explanation be-long to the electricity generation category.

Ee ee

1. Ee ee

In Germany electricity is mainly generated in large power plants us-ing nite energy sources such as coal and lignite, uranium ore, andgas and heating oil. In 2008 the growing share due to renewable en-ergy was already as high as 14.8%, ater only 6.3% in the year 2000.

Generation structure o electricity cosumed, 2008

c

le

n 2%

4%

20%

23%

13%15%reee

ne Pe

23%

oe e

Pee

d: aeee Eeeze, agEE s, pee e, e e

The specic generation costs or electricity produced rom ossil uels

are heavily dependent on the price o the uel and the price o CO2

emission rights. Whereas the production cost o electricity rom thelargely depreciated nuclear power plants costs only about 2.5 centper kWh,3 the gure or coal-red or gas-red power plants is consid-erably higher.

3 Electricit de France (EdF) expects a newly constructed EPR (European pressurised reactor) nu-clear power plant in France to result in generation costs o 5.5 cent per kWh. The capital cost o

an EPR is between

4 and

5 billion.


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Depending on the type o power plant, electricity production costscan currently range up to 7 cent per kilowatt-hour. For comparison:payments to all EEG plants in 2008 probably averaged an 12 cent perkilowatt-hour (average production costs). A distinction must be made

between electricity production costs and the market price which isdetermined on the Energy Exchange. This may be considerably high-er or lower than production costs, because prices there are stronglyinfuenced by the relationship between supply and demand (c. dia-gram below).

2. Ee

Once generated, the electricity has to be transmitted rom where it isproduced to where it is consumed with the aid o a multi-branchedgrid. This is operated by the distribution and transmission system oper-ators (TSOs). The construction and maintenance o these grids involvecorresponding costs.

According to the Federal Association o the Energy and Water Industries(BDEW), the total length o this system in Germany is currently around1.7 million kilometres. It consists o several dierent sub-systems. The ex-tra-high voltage grid (220,000 and 380,000 volt) is used or long-distancetransmission rom power plants to the centres o electricity consump-tion. Conurbations and large regions are served by the high voltage

grid (110,000 volt). Regional distribution takes place via medium (6,000to 60,000 volt) and low voltage grids (230 and 400 volt).

Power plant

Transformator

Power system220/380 kV

Small business, agriculture, detached buildings

Research, heavy industryRail transport

Industry, craft trades,

office buildings,

department storesResidential blocks

110/220 kV 110 kV

110 kV

20 kV20 kV220/380 V

20 kV

230/400 V 230/400 V

d: e ee a e Ee we ie (bdEw)


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In Germany the supra-regional extra-high voltage grid, also known asthe transmission grid, is run by only our transmission system operators:E.ON Netz, RWE Transport-Netze Strom, Vattenall Europe Transmissionand EnBW Transportnetze. These grid operators despite legal unbun-

dling are linked via their group with power plant operators and arethereore also known as integrated companies. The integrated compa-nies provide over 80% o domestic electricity generating capacity andalso hold numerous interests in regional providers and municipal utili-ties.

The average grid ees or tari customers have allen considerably as a

result o network regulation, and stood at only 5.92 cent per kilowatt-hour in 2008 (2007: 6.34 cent per kilowatt-hour) according to the Feder-al Network Agency, though in individual cases they may display marked

upward or downward variations depending on the grid operator. Theythus account or about one third o the total price o a kilowatt-hour ohousehold electricity. The share o the total price accounted or by gridees has allen rom nearly 40% to around 27%.4

4 Monitoring report 2008 by the Federal Network Agency (Bundesnetzagentur r Elektrizitt,Gas, Telekommunikation, Post und Eisenbahnen) (gures: July 2008).

The grid ees also include the cost o constantly matching the electric-ity supply to actual demand, i.e. providing regulated energy. This ad-justment process ensures that at any given time the amount o electric-ity produced in the electricity system matches the amount consumed,and that the requency o the alternating current remains constant at

50 hertz. The regulated energy is produced by power plants kept spe-

cially or this purpose. Over dened periods o time (seconds, minutes,hours) they smooth out the fuctuations that are constantly occurring inthe electricity grids. However, no plausible evidence has yet been pro-duced o the additional input or regulated energy that the grid opera-


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tors constantly claim to be necessary as a result o large fuctuations ineed-in o wind power, particularly since no extra control energy inputor renewable energy is identiable rom publicly accessible grid opera-tor data.5

However, the task o distributing EEG power to the electricity suppliersas uniorm band power gives rise to energy balancing costs or trans-mission system operators, because the fuctuating input rom wind sys-tems in particular has to be smoothed out compared with the xed

band power. The resulting expenditure also known as EEG-upgrad-ing is included in the grid ees. The Federal Network Agency ore-

casts a gure o 570 million or 2007.6 Since this orecasts is based oncost inormation rom the transmission system operators, who do not

c ze ge ee pe

Berlin

Dortmund

Bayreuth

St uttgar t

2 E.O N Netz GmbH

3 RWE Tr ansport-Netze Strom GmbH1 EnBW Transportne tze AG

4 Vatte nfall Eu rope Tr ansmission GmbH

Companys head office

se: ee a e Ee we ie (bdEw)

5 LDB-Beratungsgesellschat: Angemessenheit der Netznutzungsentgelte der bertragungsnetzbe-treiber im Autrag des Bundesverbandes neuer Energieanbieter und des Verbandes der indus-triellen Energie- und Kratwirtschat (2005).

6 See Footnote 4.


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procure EEG balancing energy on a transparent basis, the Federal Net-

work Agency has presented a key point paper with detailed proposalsor opening up the EEG upgrading market segment. I these proposalsare implemented, transparent cost data would become available.

3. mke ee

It is not only the generation and transmission o electricity that cause

costs. These actors as in other companies are joined by additionalexpenditure on selling the electricity in the market (marketing costs).The nal stage in the consumption cycle is the cost o metering or

ascertaining and communicating the amount o electricity consumed.The two cost components together come to around 0.5 to 1 cent perkilowatt-hour.

Under the Measurement Sector Deregulation Act, which entered intoorce on 9 September 2008 and the supplementary Measurement Ac-cess Ordinance, connection users can now entrust third parties withelectricity metering. One o the aims is the introduction o modernmeters which show actual energy consumption and actual usage times(smart meters). Such meters are compulsory or new connections rom

2010 onwards, and such units will also be oered when meters are re-

placed. The intention is to acilitate energy and cost savings in combi-nation with taris providing incentives to save electricity which will beavailable rom 2011 onwards.


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te e

4. Ee

The electricity tax is part o theEcological Tax Reorm, which hasbeen in orce since 1999. It is intended to provide incentives to saveenergy, make ecient use o energy and use renewable energies.Tax surcharges on the use o heating oil, petrol, diesel, natural gas,liqueed gas and electricity increase the price o these uels. This in-

ternalises external costs7 that have not so ar been taken into accountin economic decisions about the use o energy. Since revenue rom

the Ecological Tax Reorm is largely used to reduce and stabilise therate o contributions to the state pension scheme, this reduces theburden on the production actor labour and raises the cost o useo energy instead. The benets accrue not only to the environment,but also to employers in the orm o reduced personnel costs and toemployees through increased net income.

Internal consumption o electricity rom plants with a nominal ca-pacity o up to 2,000 kilowatts is exempted rom electricity tax, sincesuch plants are usually operated as ecient heat-and-power cogen-eration plants and help to strengthen decentralised electricity gen-eration.8

An electricity tax o 2.05 cent per kilowatt-hour or household-rate

power has been in orce since the th and latest stage o the reormin 2003. Ninety percent o the revenue goes straight to the statepension scheme, where it helps to keep down the level o contribu-tions. Electricity tax is also levied on electricity rom renewable en-

ergy sources.9 This was justied on scal grounds when the Ecologi-cal Tax Reorm was introduced in 1998, but still encounters a certainamount o criticism, especially since it runs contrary to one o the

aims o the Ecological Tax Reorm, namely to promote increased useo renewable energies.

7 For explanations, see box on External costs o electricity generation on page 35.8 Electricity rom power grids or lines ed entirely with electricity rom renewable energies is ex-

empt rom the tax in unlimited quantities. The exception here is electricity rom hydro-powerplants with a capacity o over 10,000 kilowatts.

9 The resulting tax revenue is estimated at910 million or 2007. Part o it is used especiallyvia the market incentives programme to promote renewable energies.

1998 1999 2000 2001 2002 since 2003

Electricity tax(cent per kWh) - 1.02 1.28 1.54 1.80 2.05


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5. ve-e

Unlike all electricity price components listed so ar, sales tax (Umsatz-steuer USt) also known as value-added tax makes a major contri-bution to nancing general government expenditure. The energy sup-

ply utilities charge it at the rate o 19% on the net electricity price(including all charges, apportionments and electricity tax) and pay itto the tax authorities. As a tax on consumer spending, value-addedtax is only intended to be borne by nal consumers o electricity. Sincebusinesses are usually entitled to deduct input VAT, it is only a transi-tory item or them.

The revenue rom value-added tax, as a community tax, goes to theederal authorities (including the state pension scheme), the regionalauthorities (Lnder) and to a small extent the local authorities. Val-

ue-added tax on electricity is levied on all other cost components men-tioned here.

6. ce eConcession charges are private-sector ees that electricity suppliers like water or gas suppliers have to pay to local authorities so thatthey can build or operate largely on or under public roads. The ba-sis or this is the Concession Charges Ordinance (Konzessionsabgaben-verordnung), which gives local authorities a certain reedom as to how

they apply it. Depending on population, municipalities can levy be-tween 1.32 and 2.39 cent per kilowatt-hour as road rental. It is possi-ble to waive the concession charge, and in some cases this is actuallydone. Non-tari customers in any case pay reduced rates or no chargesat all (see box on Relie or non-tari customers on page 10).


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P e e--pe eee ee e

The cost components or electricity rom renewable energy sources(EEG) or combined heat-and-power (CHP) plants which are describedrom here onward increase the electricity purchase costs o the pow-er supply utilities and should in principle be classied in the elec-tricity generation category described above. As a rule, however, the

electricity industry tends to show them separately. At rst sight thisis logical: or one thing they have a statutory duty to take supplies o

electricity rom EEG or KWKG sources, while or another, supplierso such electricity are largely in competition with the classic electric-ity industry. For the latter it thereore makes sense to show the EEGand KWKG surcharges separately as government motivated priceactors.

At the same time, however, other electricity price components that

are also due to state intervention are not shown separately. Oneprominent example is the substantial price-boosting impact o theCO

2emissions trading system introduced throughout Europe (see box

on Emissions Trading, page 24). In view o the largely ree alloca-tion o emission rights, this has in recent years made it possible orpower suppliers to net additional windall prots running into themillions.

7. he--pe cee a (KwKg)

Between 45 and 70% o the energy used to generate electricity is cur-rently lost in conventional power plants in the orm o unused wasteheat. This is not the case with cogeneration o heat-and-power (CHP):

the simultaneous use o heat-and-power increases utilisation o theuel in energy generation to up to 90%, the heat being used, or ex-ample, in industrial processes or in district or local heating networks.Thus cogeneration o heat-and-power ensures much lower energy con-sumption and much reduced emissions o climate-relevant carbon di-oxide (CO

2). Accordingly, the German government as an addition to

the climate agreement o 2000 reached agreement with German in-

dustry on the Heat-and-power Cogeneration Act (Krat-Wrme-Kopp-lungs-Gesetz KWKG), which was last revised in 2008 and entered intoorce on 1 January 2009. It sets out to raise the CHP share o electricityto 25% by 2020. To this end grid operators are to accept the electricityon a priority basis as in the Renewable Energy Sources Act and eedit into the grid. The electricity not used or marketed by the plant op-erator itsel is to be paid or by the grid operator at the usual market


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sources is passed on uniormly in accordance with a dened burdenequalisation mechanism to all electricity distribution companies, whothus have to meet a growing proportion o their electricity purchaserequirements rom renewable energy sources. They thereby incur ad-

ditional costs, because the average EEG remuneration that they haveto pay is usually higher than the wholesale price o the electricity most o which is not generated rom renewable energies.

In 2000 the Renewable Energy Sources Act (EEG) superseded the Elec-

tricity Feed Act (Stromeinspeisungsgesetz) o 1990 and considerably ex-panded its scope. In 2004 it underwent its rst comprehensive revi-

sion. A second revision o the Act was passed in 2008 and entered intoorce on 1 January 2009. In this process, the majority o taris werebrought into line with the current market situation and arrangementswere included or better market and system integration o the electric-ity rom renewable sources. Moreover, the expansion target or elec-tricity rom renewable sources was considerably increased: By 2020it is to account or at least 30% o German electricity generation. But

even ater that, the expansion o renewable energy is to continue; ascientic study or the Federal Environment Ministry13 expects a shareo around 50% or the year 2030.

The aim that the German government is pursuing in the EEG is to en-sure harnessing o the vast potential o wind, water, biomass, sun andgeothermal energy or electricity generation and advance the estab-

lishment o sustainable electricity generation in Germany.

13 Lead study 2008: Further development o the Strategy to increase the use o renewableenergies within the context o the current climate protection goals o Germany and Europe.Commissioned by the Federal Environment Ministry.


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According to Section 1, the Renewable Energy Sources Act pursuesthe ollowing additional aims: sustainable development o energy supply, particularly or the

sake o protecting our climate, nature and the environment;

reducing the external costs o energy supply; improving security o supply through reduced dependence on en-

ergy imports while simultaneously making a contribution toreducing conficts about ossil uels;

technological development in the eld o renewable energy

sources.

c p e EEg

According to provisional calculations by the Working Group on Re-newable Energy Statistics (AGEE Stat), a total o around 91 billion kWho electricity rom renewable sources was generated last year (2008)and ed into the grid.14 This is about 15% o gross power consumption.O this gure, about 71 billion kWh was subject to remuneration in ac-

cordance with the EEG.15 The average remuneration or the entire EEGelectricity mix in this period was probably around 12 cent per kilo-watt-hour. The sum total o EEG remuneration to plant operators wasaround 8.8 billion.

What additional costs known in the EEG as dierential costs wereactually incurred by electricity consumers depends above all on two

actors: rstly, what additional costs are incurred by electricity sup-pliers as a result o their obligation to take EEG power, and secondly,whether they pass on these additional costs in ull to their customers.

As ar as procurement o electricity by electricity suppliers is con-cerned, the compulsory purchases o electricity rom renewables re-place purchases o conventional electricity, which means the eective

additional cost is the result o the dierence between the average EEGremuneration and the purchase price o conventional electricity. Sinceall electricity suppliers have individual procurement terms and theirpurchase prices are a central business secret, the latter are not public-ly available. To calculate the average EEG costs in Germany, as in this

brochure, it is thereore necessary to estimate an average purchaseprice across all electricity suppliers as an approximation. Where elec-

tricity suppliers base their calculations o the EEG surcharge on dier-

14 Development o renewable energy sources in Germany in 2008 as o April 2009.15 The dierence is primarily due to electricity generated by hydro-power, which has been pro-

duced economically in large hydro-power plants or about 100 years and is thereore not thesubject o remuneration under the EEG.


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ent individual electricity procurement costs, this can in practice lead

to deviations rom the average EEG surcharge mentioned in this bro-chure. However, according to Section 15 o the EEG 2004 which re-mained in orce until the end o 2008, electricity suppliers are obligedon request to substantiate the calculation o a specic EEG surchargeimposed.

Whether the higher procurement costs ultimately have an impact on

nal consumer prices depends on the extent to which the electricitysuppliers are willing or able to pass on their additional procurementcosts to the customer in their electricity prices. Since there is still rel-

atively little competition on the electricity market or household cus-tomers, they can be assumed to pass these costs on in ull.

w e ee pe pe e

eee ee?

The market price or EEG electricity is taken to be the purchase priceo the conventionally generated electricity that it replaces. This pur-chase price is determined among other things in wholesale electrici-ty trading on the Leipzig electricity exchange EEX. This price also has

a major lead unction or purchase prices outside the exchange (i.e.

direct transactions between electricity producers and purchasers/endcustomers). The ollowing diagram shows the development o electric-ity prices on the EEX spot and utures markets.16

16 The spot market relates to short-term electricity supply contracts or the next day.


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The wholesale price is no longer based as it was beore the deregula-tion o the electricity market on actual generation costs, but on theprices that can be obtained on the market, i.e. on the relationship be-tween supply and demand. One clear trend is the marked rise in EEX

prices since 2002. The trend o utures prices, i.e. price hedging be-ore the actual year o delivery (ront year), shows a continuous up-ward movement. In 2007 the prices or 2008 were about 230% abovethe prices or 2003 in 2002. The price trend on the spot market showssimilar tendencies, though with the dierence that in 2007 they were

below the previous years prices, mainly because o the barely relevantprices or CO

2emission rights at the end o the rst trading period.17

Developement of wholesale price of electricity (EEX Leipzig)

0

10

20

30

40

50

60

70

80

2002 2003 2004 2005 2006 2007 2008 2009

Euro/MWh

Phelix Day Base (Spot) Futures for supply year in preceding year

Source: EEX, calculations by ine

The average electricity purchase price o all electricity suppliers canbe determined approximately by means o the EEX price. Depend-ing on the approach adopted, i.e. use o utures and/or spot marketprices, there are understandable dierences in the results. A scien-tic study commissioned by the Federal Environment Ministry rec-ommends combining the two prices: i the spot market and utures

prices or base load electricity are weighted in accordance with their

trading volume, the procurement price or 2008 works out at around5.7 cent per kilowatt-hour.18

17 In 2007 the price o CO2

emission rights was only marginally above 0 per t CO2.

18 Starting in 2009, a new calculation procedure regulated in Section 54 o the RenewableEnergy Sources Act will apply; this is based entirely on utures.


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24

E

As a result o emissions trading, CO2

emission rights now have a

market price that businesses have to include in their calculations.Operators o electricity generating plants thereore take this priceinto account despite largely ree allocation to date when calcu-lating their electricity generation costs. They can also sell the rightsi they no longer need them as a result o CO

2savings (reduced re-

quirements). The extent to which this valuation raises electrici-ty prices depends largely on the current price o emission rights

and the competition situation on the electricity market. Starting in2013, emission rights or the product electricity will have to bebought by auction. The proceeds o the auction go to the state; thiswill prevent the high windall prots currently being made by theelectricity supply companies. Auctioning emission rights will notput up the price o electricity, since the calculation o electricitygeneration costs already includes the price o emission rights.

Emissions trading was introduced in 2005 in Germany and the oth-er countries o the European Union as a new instrument or climatechange mitigation. It is intended to bring about urther reductionsin emissions o the climate-relevant gas CO

2by power plants and

other industrial installations. Its scope includes large energy plantswith a rated thermal input exceeding 20 MW and energy-intensive

industries such as cement works, reneries and iron and steel pro-duction.

I originators o CO2

emissions do not have enough emission rights

available, they can or example buy additional rights or reducetheir CO

2emissions by installing climate-riendly technologies. The

number o emission rights is limited. Emission rights can only be

bought i CO2 emissions are reduced elsewhere. In this way the CO2savings take place where they have the most avourable impact oncosts. Emission rights are traded on stock exchanges and other trad-ing centres.


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25

Analyses have shown that renewable energies have had a price-curb-ing impact on the EEX spot market prices in recent years, becausetheir additional supply gives rise to a shit in the demand curve. Thisapplies particularly to the supply o electricity rom wind energy,which is sometimes very considerable. According to scientic stud-ies or the Federal Environment Ministry, renewable energies reduced

the spot market price by an average o 0.78 cent per kilowatt-hour in2006.19

Using the example o 2008, the ollowing table shows what eect di-erent assumptions about the market value o EEG electricity have onthe size o the EEG dierential costs or the electricity industry andend customers.

ap pee

pe e ee-

e ee [e pe kw]

2008

Extra costo

EEG*(billion euro)

Calculated EEGsurcharge or private

households(cent per kWh)

5.5BDEW

(basic-uture-price)4.6 1.1

5.7BMU expertise

Electricity purchase costs

Electricity suppliers4.5 1.1

11.5BMU plus

inclusion o external

costs200.4 0.1

* Data basis in each case: EEG electricity quantity 71 billion kWh, average EEG payment: 12 cent/kWh,most recent consumption 495 billion kWh. Electricity purchases by companies privileged underSection 16: 76 billion kWh, external costs 5.8 cent per kWh; igures rounded.

19 C. Sensu/Ragwitz/Genoese: The merit-order-eect: A detailed analysis o the price eect orenewable electricity generation on spot market prices in Germany. Fraunhoer InstituteSystems and Innovation Research, Working Paper 07/2007

20 See box on External costs o electricity generation on page 35.


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26

what doEs thE EEg cost ElEctricity

customErs?

A reerence household with an annual electricity consumption o

3,500 kilowatt-hours is oten used to make it possible to compare theelectricity costs o tari customers over a period o several years. Inact, individual electricity consumption depends on a large numbero actors such as number o persons, usage habits, or age andnumber o electrical appliances. For example, household electricity

consumption can range rom nearly 2,000 kWh or a 1-person house-hold to 6,000 kWh or households with 5 or more persons.21 House-

holds that are well equipped with ecient appliances and makesparing use o energy may nevertheless keep their annual consump-tion down to as little as 2,000 kWh or 4 persons. By the way: Do youknow how much electricity you use every year?

c en

The ollowing table shows how average monthly electricity costs orthe reerence household mentioned above have developed over thelast seven years. The gures are based on inormation rom the Fed-eral Association o the Energy and Water Industries (BDEW). Only theEEG levy since 2005 is calculated rather dierently than by the BDEW,in line with the assumptions explained above regarding the procure-ment price o conventionally generated electricity.

2000 2002 2004 2006 2007 2008 2009

Ee / (3,500 kw/) 40,67 46,99 52,48 56,63 60,26 62,93 65,97

Generation, transmission, marketing 25,15 28,32 31,56 34,53 35,70 38,01 40,48

Renewable Energy Sources Act (EEG)* 0,58 1,02 1,58 2,20 2,90 3,10 3,10

Heat-Power Cogeneation Act (KWKG)** 0,38 0,73 0,91 0,90 0,85 0,58 0,67

Concession charge*** 5,22 5,22 5,22 5,22 5,22 5,22 5,22

Electricity tax (eco-tax) 3,73 5,22 5,97 5,97 5,97 5,97 5,97

Value-added tax 5,61 6,48 7,24 7,81 9,62 10,05 10,53

Electricity bill at 2005 prices 43,87 49,00 53,28 55,74 58,00 59,03 61,31

* Figures rom 2005 onward: BMU calculations on the basis o applicable wholesale prices.** From 2002 on the basis o the new Heat-and-power Cogeneration Act, which has been in orce

since 1 April 2002. Increase due to reduction in burden on manuacturing industry.*** Great regional dierences: 1.32 to 2.39 cent per kilowatt-hour rom 2002 onward, depending

on community size; some municipalities dispense with this income.

Sources: Bundesverband der Energie- und Wasserwirtschat (BDEW); calculations by ine

21 Forsa/EWi: Erhebung des Energieverbrauchs der privaten Haushalte r das Jahr 2005.Forschungsprojekt Nr. 15/06 im Autrag des Bundesministeriums r Wirtschat undTechnologie 2008.


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In 2008 the EEG surcharge, at about 1.1 cent per kilowatt-hour, only

accounted for a bare 5% of the total household electricity price.

In individual cases there are naturally considerable variations in thesize o the EEG surcharge, depending on electricity consumption. Onthe basis o the above mentioned spectrum or individual household

or user types, the average EEG levy or 2008 mostly gives rise to house-hold costs o between about2 and 6 per month.

why arE ElEctricity PricEs rising dEsPitEcomPEtition?

The table on page 26 also shows that there has been a steady in-crease in the price o electricity or households in recent years. Thisis primarily due to the price components or generation, transportand marketing which are attributable to the electricity industry. In-cluding the relevant value-added tax, their share o the annual elec-tricity price rises came to between 56 and 92%. A large part o thesizeable overall increase in monthly electricity bills rom 2006 to2007 was due to the increase in value-added tax rom 16 to 19%.


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28

The infuence o the other components, such as electricity tax, Co-generation Act and EEG, was considerably smaller. By contrast, theEEG-induced proportion o the annual increase in electricity pricessince 2001 including the relevant value-added tax has been be-

tween only 7 and 27%. Thus the EEG is not the principal price actorthat the electricity industry likes to make it out to be (c. nextdiagram).22

Share of the increase in electricity costs (private households)

Electricity tax incl. VAT

Renewable Energy Sources

Act incl. VAT

Heat-Power Cogeneration

Act. incl. VAT

Generation, transmission

marketing incl. VAT

0%

20%

40%

60%

80%

100%

73%

3%

7%

17%

Increase

01/02

56%

9%

8%

28%

Increase

02/03

83%

17%

Increase

03/04

78%

5%

17%

Increase

04/05

83%

17%

Increase

05/06

69%

26%

5%

Increase

06/07

92%

8%

Increase

07/08

Special eects in 2007 due to increase in VAT rom 16 to 19 percent.Data: Federal Association o the Energy and Water Industries (BDEW), AGEE-Stat, calculations by ine

But why have costs in the eld o electricity generation and transport

been rising continuously or several years?

22 2007 increase o Electricity tax is caused just by raise o rate o taxation VAT.

le pe e ee ee e

Electricity and its price have a special history compared with oth-er goods and services. Until 1998 the supply o electrical energy wasgoverned by an Energy Management Act dating rom 1937, the basiceatures o which were thus over 60 years old at that time. Germanywas divided into supply districts with in which the individual suppli-

er had a duty to supply (demarcation agreements), but also enjoyed

a monopoly. To prevent the supplier rom demanding exorbitantmonopoly prices rom the customer, electricity prices were subjectto approval. This situation, which had been established or decades,changed when an EU directive o 19 July 1997 obliged the MemberStates to gradually open the electricity markets. This directive was


29/44

29

transposed into German law in the new Energy Management Act (En-ergiewirtschatsgesetz EnWG) o 1998. The new Energy Manage-ment Act abolished the district monopolies and basically permittedree competition.

The revision o the Energy Management Act (EnWG) in 2005 creat-ed a new regulatory ramework or the energy industry. The naturalmonopoly in the electricity grid sector is now subject to regulation.Since the revised version entered into orce, the grid ees have been

approved by the Federal Network Agency and the regulatory author-ities o the ederal Lnder. From 2009 onward the system o grid ee

approval will be replaced by incentive-based regulation, which is in-tended to bring about a steady increase in the eciency o grid op-eration and a reduction in grid ees. Grid operators are obliged toprovide grid connections and system access to anyone, and to ex-pand grids to cater or needs. Separation o the generation, transportand marketing sectors within an integrated energy supply enterpriseis subject to rules or unbundling o grid operation.

Since 1998, however, there has been increasing concentration in theelectricity supply sector, with the our major integrated companiesacquiring interests in municipal utilities and regional suppliers. To-day, grid ees are a central competition actor. In its 2008 monitoringreport, the Federal Network Agency thereore stated:

Base in particular on the overwhelming market share o these two com-panies [RWE and E.ON; Editors note: see also end o sentence] in the gen-

erated net capacity o electricity, the ederal electricity markets that sup-

ply large industrial customers, municipal utilities and energy traders with

electricity are dominated by an oligopoly with a dominant position and

no competition, which according to the fndings o the Federal Cartel O-

fce currently consists o RWE and E.ON.23

In the annual report 2007 it had already been noted that:

The competition situation on the electricity markets upstream and down-

stream o the grid sector did not improve signifcantly in 2006 either. The

trend towards greater market concentration is thereore continuing.

The players active on the demand side are a small number o major cus-

tomers, sourcing-optimised redistributors and the major electricity supplycompanies themselves. The our biggest electricity supply companies to-

gether account or an overwhelming share o the trading oers.24

23 Monitoringbericht 2008 der Bundesnetzagentur r Elektrizitt, Gas, Telekommunikation,Post und Eisenbahnen, page 13.

24 Monitoringbericht 2007 der Bundesnetzagentur r Elektrizitt, Gas, Telekommunikation,Post und Eisenbahnen, page 11.


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30

The monopoly commission set up by the German government hasalso been examining competition on the electricity market or sever-al years now, and in 2007 it presented a special report. Although thisnotes progress on some ronts, it reaches the ollowing overall con-

clusion:

The analysis o the German electricity and gas market shows that on the

markets or grid-based energy supplies in the Federal Republic o Germany

one still cannot speak o a unctioning market.25

The reasons given are:

Concentration o electricity generation on a small number ocompanies.

Numerous horizontal and vertical linkages between the market-con-trolling transmission system operators themselves and between theTSOs and downstream municipal utilities.

High barriers to market access or new companies. Small number o nal consumers changing suppliers.

Participation by the our integrated companies in municipal utili-ties and other redistributors.

Similar statements or Germany and the EU were also made in thereport by the EU Competition Commission in February 2006.26In September 2007 the EU Commission made suggestions or a thirdsingle market package with a view to advancing deregulation o the

markets.

Thus more competition on the electricity generation market calls or

more suppliers and above all or sucient generating capacity, sincecapacity shortages would inevitably result in higher prices. Renewableenergy sources make a great contribution to the provision o new andenvironmentally sound generating capacity.

25 Sondergutachten der Monopolkommission gem 62 Abs. 1 des Energiewirtschatsgesetzes.Strom und Gas 2007: Wettbewerbsdezite und zgerliche Regulierung,page 14. Bundesdrucksache 16/7087.

26 DG Competition report on energy sector inquiry (SEC(2006)1724).


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31

w ee pe?

Electricity rom renewable energy sources is also known asgreen

power. However, this does not mean that the green power sold un-der various product names by electricity suppliers is the same asEEG electricity.

Electricity remunerated under the EEG is expressly not allowed

to be marketed as green power. This is prohibited by the dou-ble marketing ban in Section 56 o the Renewable Energy Sourc-

es Act. In other words, green power must have been producedin generating plants not subject to remuneration under the EEG,which may also mean abroad.

Since the termgreen poweris not clearly dened or even protect-ed, there are many products o widely varying quality on sale onthe electricity market. For this reason a number o organisations

oer certications that claim to say something about the qualityo the green power (e.g. Grner Strom Label gold/silber or OK-Power). The Federal Environment Agency is currently drawing upcertication standards or awarding the Blue Angel or greenpower.

The green power products requently include a very large propor-

tion o (relatively inexpensive) hydro-power, which has been pro-duced and exported by Scandinavia, Austria or Switzerland, in

some cases or many years. Under present-day market conditions,German demand or green power is unlikely to create any addi-tional demand or electricity rom renewable energy sources.

Anyone who wants to pursue environmental and especially cli-

mate protection objectives with their choice o electricity shouldthereore make sure that their decision does indeed contribute tothe building o new plants or generation o electricity rom re-newable energy sources, thereby creating incentives to shit the

present electricity mix in the direction o more renewables.

Against this background, consumers are well advised to obtain in-

ormation about the kind o certication and the underlying re-quirements beore they consider changing to a green power tari.This is easily done by Internet.


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32

e eepe

The ongoing dynamic expansion o electricity generation rom re-newable energy sources, especially in the young and innovative

elds o oshore wind energy, solar energy or biomass, will initial-ly result in a urther rise in the costs o the Renewable Energy Sourc-es Act in the years ahead though with a downward drit: or exam-ple, the decreasing rates or payments under the EEG will make theireects elt (see diagram below). Moreover, the act that the price o

conventionally produced electricity will in all probability continueto rise (e.g. as a result o targeted reductions in CO

2emission rights,

price increases or natural gas and coal, decline in power plant gen-erating capacity) will ensure a gradual reduction in the cost dieren-tial or power rom renewable energy sources.

Renumeration rate for new plants

0

5

10

15

20

25

30

35

40

45

50

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

at 2008 prices

Cent

2008

/kWh

Wind-onshore, initial rate Photovoltaik-roof, up to 30 kW

2008

Source: EEG 2004, EEG 2009, calculations by ine; average infation rate 2% p.a.

According to estimates made or the BMU, the monthly EEG sur-charge or the reerence household mentioned above (3,500 kWhper a) could show a urther increase to more than 4 by 2015.27 Thiswould mean monthly EEG costs o over 2 or a single-person house-hold.

27 Price basis 2008. C. Ausbau erneuerbarer Energien im Strombereich bis zum Jahr 2030.www.erneuerbare-energien.de/inhalt/42785/40870/
http://www.erneuerbare-energien.de/inhalt/42785/40870/http://www.erneuerbare-energien.de/inhalt/42785/40870/


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Ater that, the decreasing cost o renewables due to the declining

rates o remuneration, coupled with continuing price rises or con-ventional power, will result in a continuing marked reduction inthe size o the EEG surcharge. On this basis it will be only around60 cent per month in 2030 or an reerence household with3,500 kWh per a, or around 30 cent per month or a single-personhousehold.

For the moment, however, no urther increase in EEG dierentialcosts is to be expected or 2009, in view o the recent marked in-creases in EEX spot market prices.

why EEg costs arE only hal thE truth

The public debate about the cost o renewable energy generally o-cuses on the additional procurement costs o the electricity suppliersand the resulting EEG surcharge or nal consumers. This issue hasbeen discussed in detail in this brochure. For a sound economic as-sessment o renewable energy sources and the EEG, however, it is notenough to conne ones view to these operating cost actors.


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34

For one thing, it ails to take account o other costs attributable to re-newable energy sources. These include, or example, the addition-al cost or basic and balancing energy that is needed because o the

fuctuating input o electricity rom photovoltaic and especially windenergy systems. Other actors are grid expansion due to the integra-tion o power rom renewables, and administrative costs incurred bygrid operators or implementation o the EEG. These additional costactors are dicult to quantiy. They have been estimated to total be-

tween 300 million and 600 million or 2006,28 the dominant shareo which is due to basic and balancing energy.

On the other hand, the expansion o renewables also involves anumber o benecial eects that are not refected in the operatingcost actors so ar considered. On an overall view they considerably im-prove the economic bottom line or renewables.

Apart rom the reducing eect o the EEG on wholesale electricity

prices, the external costs o electricity generation rom ossil uels thatare avoided by using renewable energy sources are particularly im-portant rom a macro-economic point o view (see box on Externalcosts o electricity generation on page 35): I these costs were allocat-ed in strict accordance with the polluter pays principle, the price oelectricity rom non-renewable energy sources would be much higher.There would be a corresponding reduction in the EEG surcharge and

the additional cost o EEG power procurement. In this connection ascientic study or the BMU came to the conclusion that the externalcosts saved by EEG electricity, at4 billion in 2008, were more or less

equal to the additional procurement costs or the EEG.

Electricity generation rom renewable energy sources also results in asignicant reduction in imports o coal and natural gas into Germany.

In 2007 this reduced Germanys bill or uel imports, ater allowing orbiomass imports, by about1.0 billion.

28 Fachgesprch zum Merit-Order-Eekt im Autrag des Bundesministeriums r Umwelt,Naturschutz und Reaktorsicherheit Berlin am 07.09.2007. Abgestimmtes Thesenpapier. Avail-able rom www.erneuerbare-energien.de.
http://www.erneuerbare-energien.de/http://www.erneuerbare-energien.de/


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35

Ee ee ee

The concept o external costs is a rmly established part o eco-

nomic theory. External costs arise, or example, where electricitygeneration causes damage that electricity producers do not haveto include as costs in their electricity prices. Examples includedamage arising rom global climate change, harmul eects onhealth, or damage to materials due to acid and soot. On a broader

view, external costs also arise where access to energy resources issecured by political and military means.

External costs may be included in electricity prices i relevant pro-visions require the originators to take technical or organisationalmeasures that cause additional costs (internalisation). Examplesinclude stricter limit values or sulphur dioxide, nitrogen oxidesand particulates in the case o power plants in the 1980s and1990s, and also electricity tax or emission rights or carbon diox-

ide (see box about Emissions trading on page 24). Calculatingexternal costs is a complex task, and the results vary widely de-pending on the choice o parameters. There are thereore consid-erable fuctuations in the gures quoted in studies.

The expected costs o damage due to climate change account orthe largest share o the external costs o electricity generation. A

study conducted or the Federal Environment Ministry (DLR/FhG-ISI 2006) comes to the ollowing conclusion: These costs are very

likely to be over 15 per tonne o carbon dioxide (CO2), and could,

on plausible assumptions, work out at up to 300 per tonne CO2.

According to this investigation on the basis o studies analysed,one can work on a best estimate o 70 per tonne CO

2. The exter-

nal costs o electricity generation in modern lignite and coal pow-

er plants thus come to between 6 and 8 cent per kilowatt-hour,and are thereore well in excess o the electricity production costso 2 to 5 cent per kilowatt-hour. As a rule, the external costs oelectricity rom renewable energy sources are less than 1 cent perkilowatt-hour.

Estimates in various studies regarding the external costs o nu-

clear power range rom less than one cent per kilowatt-hour tomore than 2 per kilowatt-hour. The immense damage caused bya maximum credible nuclear accident is not covered by insuranceand must, in the worst case, be borne by society.


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36

One must also remember the positive eects o renewable energy ongrowth and employment: In 2008 it was already providing employ-ment or some 278,000 people in the electricity, heating and motoruel markets in Germany. More than hal o these jobs are attributable

to the EEG.

The basis or this positive trend is the rise in domestic sales o renewa-ble energy (2008: about29 billion) that has been in progress or yearsand to an increasing extent the export success o the German re-

newables sector. The latter is proting considerably rom the act thatthe EEG and research promotion measures in particular have set in

motion a technological development that has given Germany a lead-ing position on the world market in various elds in the renewablessector. Today wind turbines or biomass power plants Made in Ger-many are already very successul internationally and still have con-siderable growth potential, because renewable energy markets world-wide are booming. The act that the EEG itsel is increasingly provingto be an export hit both refects this trend and is one o its main driv-

ing orces.

The Renewable Energy Sources Act (EEG) as an instrument with xedeed payments that can be predicted or long periods is a method opromoting and organising renewable energy which is considerablymore ecient and cost-eective than other approaches such as quotasand bonus models. This has several times been conrmed by the Eu-

ropean Commission. Moreover, the EEG stimulates competition on theelectricity market: it creates distributed generating structures with con-

siderably more actors, thereby reducing imbalances o market power.


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37

rEnEwablE EnErgy grEat bEnEits,dEPEndablE PricEs

Renewables have long since emerged rom their much ridiculedniche existence and established a rm place in the energy mix. Theirurther expansion is certain now that the European Union has laiddown ambitious and binding targets. These state that by 2020 re-newables are to account or as much as 20% o Europes energy con-sumption. For Germany this means a share o 18%.

These targets ocus attention not only on the electricity sector, butalso on the use o renewable energy sources in heat production andin the transport sector. This includes the revised EEG 2009 and thenew Renewable Energy Sources Heat Act, and also numerous othermeasures to improve energy eciency and reduce energy consump-tion.


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38


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39

In the electricity sector, Germany is already in a particularly good

position to expand renewable energies. This is largely thanks to theEEG, which next to the Ecological Tax is by ar the most successulinstrument or reducing climate-relevant carbon dioxide emissions.First estimates by the Working Group on Renewable Energy statis-tics (AGEE-Stat) indicate that in 2008 renewable energy sources saved

some 75 million tonnes o CO2

in Germany in the electricity genera-tion sector alone, o which about three quarters is due to the Renew-

able Energy Sources Act. By 2020 renewable energy sources could al-ready make it possible to save nearly 140 million tonnes o CO

2in

the electricity sector alone; in all three sectors together electricity,heat and motor uels the contribution o renewables to CO

2reduc-

tion could be as high as 190 million tonnes.29

The EEG will continue to play a key role in the expansion o renewa-

ble energy sources in the uture as well: whereas the cost o conven-tional electricity generation will go on increasing as a result o risinguel prices and the need to construct new power plants, most o theeed-in remuneration payments laid down in the EEG will go downevery year. Thus renewable energy sources will steadily become moreeconomic. The revision o the EEG in 2009 also embodies incentivesor better integration o renewables in the electricity system and or

separate marketing o electricity generated rom renewables. Thistoo will urther improve the protability o electricity generationrom renewables.

The expansion o renewable energy sources creates the basic require-ments or sustainable and technologically viable energy supply atreasonable prices in the long term. It will conserve the basis or the

lie o uture generations and put new and especially environment-riendly technologies in place on the world market.

Good prospects or the uture!

29 As in the Federal Environment Ministrys Lead Study 2008, c. Footnote 13.


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40

suggEstions or urthEr rEading

Publications by the Federal Ministry for the Environment,

Nature Conservation and Nuclear Safety Renewable energy sources in gures National and inter-

national development. Wirtschatsrderung durch erneuerbare Energien

Was bringt uns das? (german only). Renewable Energies Act: The Renewable Energy Sources Act.

Renewable Energy Sources Act Progress Report 2007.

DLR/FhG-ISI (2006): Externe Kosten der Stromerzeugung auserneuerbaren Energien im Vergleich zur Stromerzeugung aus os-silen Energietrgern. Report commissioned by the Federal Minis-try or the Environment, Nature Conservation and Nuclear Saety.

Nitsch, Joachim (2008): Lead study 2008: Further development o

the Strategy to increase the use o renewable energies within thecontext o the current climate protection goals o Germany and

Europe. Study commissioned by the Federal Ministry or the Envi-ronment, Nature Conservation and Nuclear Saety.


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41

EWI/Prognos AG (2005): Energiereport IV Die Entwicklung der

Energiemrkte bis zum Jahr 2030. Study commissioned by theFederal Ministry or Economics and Labour.

Wenzel, Bernd; Diekmann, Jochen (2006): Ermittlung bundes-weiter, durchschnittlicher Strombezugskosten von Elektrizitts-versorgungsunternehmen. Report commissioned by the FederalMinistry or the Environment, Nature Conservation and Nuclear

Saety.

Wenzel, Bernd; Nitsch, Joachim (2008): Ausbau erneuerbar-er Energien im Strombereich bis zum Jahr 2030. Study commis-

sioned by the Federal Ministry or the Environment, Nature Con-servation and Nuclear Saety.

WI/DLR/ZSW/PIK (2007): RECCS Strukturell-konomisch-kolo-gischer Vergleich regenerativer Energietechnologien (RE) mit Car-bon Capture and Storage (CCS). Research project commissionedby the Federal Ministry or the Environment, Nature Conservationand Nuclear Saety.


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43

inormation about rEnEwablE EnErgy on thEintErnEt

This list shows only a small selection o inormation available on theInternet that is closely related to the topics in this publication.

bundesrecht.juris.de/eeg_2009: Renewable Energy RessourcesAct in german. English version o the Renewable Energy SourcesAct: http://www.erneuerbare-energien.de/les/pds/allgemein/ap-plication/pd/eeg_2009_en.pd.

www.bdew.de: Federal Association o the Energy and WaterIndustries (Bundesverband der Energie- und Wasserwirtschat),EEG data.

www.bine.info: Inormationabout energy conservation anrenewable energies (german only).

www.bmu.de: Federal Ministry or the Environment, Nature Con-

servation and Nuclear Saety (Bundesministerium r Umwelt, Natur-schutz und Reaktorsicherheit).

www.co2online.de: Project sponsor o the climate protectioncampaign, comprehensive inormation portal on ecient exploi-tation o energy and utilisation o renewable energy sources

(german only).

www.dena.de/themen/thema-reg: German Energy Agency(Deutsche Energieagentur).

www.eex.de: European Energy Exchange.

www.energiefoerderung.info: Development programmedatabase.

www.erneuerbare-energien.de: Federal Environment Ministrysinormation portal on renewable energy sources.

www.externe.info: EU research ndings on external costs romthe ExternE project.

www.klima-sucht-schutz.de/oekostromrechner.0.html :Comparative calculator or green power taris.

www.unendlich-viel-energie.de: Inormation campaign onrenewable energy sources.
http://bundesrecht.juris.de/eeg_2009http://www.erneuerbare-energien.de/files/pdfs/allgemein/application/pdf/eeg_2009_en.pdfhttp://www.erneuerbare-energien.de/files/pdfs/allgemein/application/pdf/eeg_2009_en.pdfhttp://www.bdew.de/http://www.bine.info/http://www.bine.info/http://www.bmu.de/http://www.co2online.de/http://www.dena.de/themen/thema-reghttp://www.eex.de/http://www.energiefoerderung.info/http://www.energiefoerderung.info/http://www.erneuerbare-energien.de/http://www.externe.info/http://www.externe.info/http://www.klima-sucht-schutz.de/oekostromrechner.0.htmlhttp://www.unendlich-viel-energie.de/http://bundesrecht.juris.de/eeg_2009http://www.unendlich-viel-energie.de/http://www.klima-sucht-schutz.de/oekostromrechner.0.htmlhttp://www.externe.info/http://www.erneuerbare-energien.de/http://www.energiefoerderung.info/http://www.eex.de/http://www.dena.de/themen/thema-reghttp://www.co2online.de/http://www.bmu.de/http://www.bine.info/http://www.bdew.de/http://www.erneuerbare-energien.de/files/pdfs/allgemein/application/pdf/eeg_2009_en.pdf


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