BNetzA Reported to Expect Rising Electricity Costs Due to Higher Grid Costs

The German Grid Regulator (BNetzA) expects electricity cost to rise as the need for an expansion of the German grids will drive up costs, the newspaper Frankfurter Allgemeine Zeitung (FAZ) reports.

BNetzA reportedly estimates that electricity costs for household customers will increase by 5% to 7%, assuming that grid charges will rise by 16% to 24%, FAZ says. For commercial customers grid charges are expected to rise by up to 54%, resulting in an increase of electricity prices of up to 8%.

The calculations are based on the scenario framework for the electricity grid development, which the transmission system operators presented in December 2011 and which has been approved by BNetzA. As FAZ points out the assumptions for the need of investments into the grids range from just under EUR 30 billion to up to EUR 47.5 billion. More detailed information will be available when the transmission system operators will have presented the national grid development plan (Section 12 b German Energy Act – EnWG) – for which the scenario framework is the preparatory work – in June 2012,  and Parliament (Bundestag) will thereupon have adopted the “Federal Requirement Plan for Transmission Networks” (Bundesbedarfsplan Übertragungsnetze) pursuant to Section 12e EnWG.

Other cost drivers for electricity prices like a rising surcharge for renewable energy (EEG surcharge or reallocation charge), the need to build new power plants following the shutdown of eight nuclear power plants last year in the wake of the Fukushima nuclear accident, and the subsequent German energy policy shift are not (yet) included in BNetzA’s forecast, FAZ says. Besides, the above estimates were only the lower limit of what could be expected in terms of price increases. According to FAZ, the BNetzA report mentions the following factors that could lead to even higher electricity costs.

Firstly, undertakings that shut down their operations have to be compensated. For 2012 BNetzA estimates the costs at EUR 100 million, in the medium term at EUR 270 million per year. One such compensation results from the Renewable Energy Sources Act (EEG) that promotes renewable energy by stipulating that grid operators in principle and as a priority have to purchase, transmit and distribute the entire available quantity of electricity from renewable energy sources and from mine gas (Section 8 para. 1 EEG). In case of an overload that cannot be dealt with otherwise, grid operators can resort to feed-in management, disconnecting plants under certain conditions (Section 11 EEG). With few exceptions, the renewable power plant operators have to be compensated pursuant to Section 12 EEG.

Secondly, a national rollout of smart meters would lead to grid costs of up to EUR 700 million. Inverters needed to integrate the increasing intermittent input from photovoltaic power plants would cost an additional EUR 200 million, BNetzA estimates.

Applications for a reduction of grid fees (pursuant to Section 40 et seqq. EEG) or an exemption (pursuant to Section 19 para. 2 sent. 2 Electricity Grid Charges Ordinance – StromNEV) by eligible consumers with high consumption (energy-intensive companies) have considerably risen. Thus the remaining grid costs have to be borne by all other non-eligible customers.

Source: Frankfurter Allgemeine Zeitung 19 March 2012, page 11