IW/Handelsblatt: Energy Transition Costs EUR 28 Billion per Year – Shutdown of 57 Power Plants

According to calculations by the Cologne Institute for Economic Research (IW) for the business daily Handelsblatt, Germany’s transition towards a renewable energy supply (Energiewende) costs consumers EUR 28 billion annually. Using a standard 3 person household with 3,500 kWh consumption as a basis, this would mean EUR 270 per year . Dividing the EUR 28 billion by the number of inhabitants, this would mean EUR 345 per person and EUR 1,035 per 3 person household.

1. IW Handelsblatt Study

The figures do not only include support for renewable energies (consumers pay a so-called EEG sucharge of currently 6.17 ct/kWh), but also costs arising from the need to expand the grids (to accommodate intermittent renewable power input) and the latest government decisions for additional support of the CHP technology and a capacity reserve (for more information, please see here). We have not seen the calculations yet, but would like to point out that in 2014, consumers paid EUR 21.4 billion in EEG surcharges alone.

Using the standard 3,500 kWh (direct) consumption per 3 person household per year, annual costs would be EUR 270.  However, if we divide the EUR 28 billion by the 81,083,600 inhabitants living in Germany (per 30 September 2014), this means EUR 345 per person – or EUR 1,035 for the three person statistical household. The latter calculation is usually not done, and not contained in the Handelsblatt article.

In view of the costs, Handelsblatt quotes Barbara Minderjahn, co-head of VIK, an association that represents the interests of industrial and commercial energy consumers, as saying “The Energiewende was made under the assumption that energy costs were manageable and would increase to the same extent internationally. Both has not come true.” Ulrich Grillo, President of the Umbrella Organisation of the German Industry BDI told Handelsblatt: “The calculations demonstrate the real costs of the Energiewende. Companies are afraid they will rise even further.”

“The grand coalition has to do some rework (to the Energiewende)”, Handelsblatt quotes Carsten Linnemann, head of the group that represents business interests (Mittelstands- und Wirtschaftsvereinigung) for the conservative CDU/CSU parties in the grand coalition. “The effects of the Energiewende are becoming a threat to Germany as a business location that is deterring investors and costing jobs”, Mr Linnemann added.

2. Power Plant Closures

Meanwhile 57 power plants are reportedly planning to shut down temporarily or permanently due to falling energy prices. Unlike renewable power plant operators that receive either fixed feed-in tariffs or a market premium on top of the revenue for power they sold themselves (so-called market premium), conventional power plant operators have to content with prices at the energy exchange, which have considerably decreased over the years not least to the growing input of renewable energy.

Hildegard Müller, head of the the Federal Association of the Energy and Water Industry (BDEW), expressed concern for the security of supply.

Please see here for the list compiled by the regulator Federal Network Agency (BNetzA), naming the plants that the operators want to shut down. According to further information by BNetzA, by 20 July 2015 the agency had been informed about a total of 9,169.1 MW to be shut down, including 4,587.1 MW in southern Germany that has high energy needs because of its industry. Of the above total 4.847 MW have already been shut down so that the remaining difference is 4,322.1 MW, BNetzA says. 

Please note that Section 13a para. 1 EnWG stipulates that operators of plants generating or storing electricity with a rated power of 10 MW or more are required to inform the responsible transmission operator and BNetzA at least twelve months prior to a preliminary or permanent closure of power plants or parts thereof.  According to Section 13a para. 2 EnWG a permanent closure of  plants generating or storing electricity with a rated output of 50 MW or more is prohibited after the expiry of the period set out in Section 13a para. 1 EnWG if

  • the responsible TSO declares the plant “system-relevant”;
  • BNetzA approved this assessment;
  • and it is technically and legally possible to continue operations.

A plant is deemed “system-relevant” if it is sufficiently likely that a permanent closure would lead to a substantial danger for or an interference with the safety or reliability of the electricity supply system and cannot be overcome by other suitable measures. The so-called Reservekraftwerksverordnung (Ordinance on Reserve Power Plants – ResKV) further specifies the above provisions. It also sets the requirements for an “appropriate remuneration” (cf. Section 11 paras. 2 to 4 ResKV).

Source: Handelsblatt

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