Saturday, September 8, 2012

Deutsche Bank Sees Germany's renewables surcharge over 10 cents/kWh (US) by 2014

Estimates for a steep increase in the EEG reallocation charge have been around for a while - Deutsche Bank sees the highest estimates for 2013 and raises with another steep increase estimated for 2014 (one Euro currently costs about $1.25 Canadian or US dollars) 

German environment minister has presented a 10-point energy programme:
The EEG reallocation charge (EEG-Umlage) will increase to around 6 cents per kWh (2012: 3.59 Ct/kWh) in 2013 and perhaps 8 Ct/kWh in 2014 (own calculations), whereas in 2011 Chancellor Merkel promised a limit of 3.5 Ct/kWh for the future.
The headline I selected due to an informative, if slanted article where I picked up the link to the Deutsch Bank statement:  German renewables surcharge designed to skyrocket.

The increasing grid charges discussed in the article are also largely due to moving to renewables and the increased complexity of a system with multiple smaller generation sites - as well as the requirements for high voltage direct current (HVDC) lines demanded by some of the projects.

Decreasing wholesale market prices are largely due to feed-in tariffs distorting the markets ability to balance supply and demand (FITs inflate supply, which depresses price).

Bias aside, German renewables surcharge designed to skyrocket is very informative.  The EEG does go up as the wholesale rate goes down (just as in Ontario the Global Adjustment rises as the HOEP drops); the exemptions granted to businesses do transfer costs to consumers (just as in Ontario the creation of Class A GA customers shifted the cost to others).
There are real social justice concerns.
...grid fee exemption is yet another way of shifting the cost of power supply – here, of the grid – away from industry and onto consumers, who increasingly have to cross-subsidize the economy.
The result will be a tremendous price tag that the press can report in a headline: “Renewables cost Germans 8 cents per kWh.” In places like West Virginia, where the retail rate is sometimes not much higher than eight cents, the impression will be that switching to renewables like Germany did could double power prices. But in Germany, the retail rate has risen by around 11 cents since 2011, and only 3.6 cents of that is the result of renewables. The main price driver must be looked for elsewhere. 

The retail rate has risen "11 cents" since 2011?

That is a 14 cent/kWh annual increase in West Virginia's money.

West Virginia residential customers only pays 10 cents/kWh!

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