Germany First in Europe to Tax Consumer Use of Renewable Energy

Jan 24, 2014 10:12 am ET

Jan. 24 (Bloomberg) -- Germany is set to become the first nation in Europe to charge owners of renewable energy plants for their own use of electricity, part of Chancellor Angela Merkel’s effort to contain rising power bills.

Merkel’s Cabinet backed proposals to charge operators of new clean-energy plants 70 percent of the so-called EEG-Umlage, a fee paid by power consumers that they’re currently exempt from, according to an economy ministry document obtained today by Bloomberg News. That would translate into 4.4 euro cents (6 cents) a kilowatt-hour.

The solar industry says such a payment would curb investments in the technology in the nation that has the most installations of photovoltaics in the world.

“The fee will make the environmentally friendly self- consumption of solar power unattractive, especially for the Mittelstand, farmers and companies,” the BSW-Solar industry group said in a statement. Developers that consume their own solar power already lower the costs of Merkel’s energy program by not selling their power to the grid at above-market rates, the group said.

Germany would be the first European country to penalize the self-consumption of solar energy, something only Arizona has done so far. Spain is also working on a similar plan to ensure small solar power generators, which reduce total grid users, help pay for network costs. As many as a dozen U.S. states are also considering charges for solar rooftop owners.

German Plan

German consumers pay for the country’s clean-energy expansion through a surcharge on their bills. The fee is inflated by the rebates for consumers that use their own power and by companies that are large energy users. It jumped 18 percent to 6.24 euro cents a kilowatt-hour this year. German households are now paying more for electricity than any other nation in the European Union except Denmark.

The charge would not be applied to new units sized 10 kilowatts or smaller, according to the document, which is dated Jan. 22. Operators of new fossil-fired plants who consume the power themselves would have to pay 90 percent of the charge, according to the document.

Arizona approved a charge of 70 cents a kilowatt in November, setting a precedent for the U.S. market. In California, where solar already powers 626,000 homes, utilities are pushing for fees to connect solar panels to the grid that would add about $120 a year to rooftop users’ bills, a move trade groups say would slow installations.

--Editors: Reed Landberg, Tony Barrett