EU Cracks Down On German Grid Fee Exemptions

March 11th, 2013 by Zachary Shahan

Most of you are probably unaware of the German policies discussed below, so here’s a quick intro for context: Germany decided sometime back that certain industries and companies would be exempt from certain portions of a typical customer’s electricity bill — those include grid fees and renewable energy surcharges. The argument was that the extra fees weakened the international competitiveness of German firms. In actuality, I think this was largely just a rigging of the system to yet again benefit the rich at the expense of the less rich (but that’s just my 2 cents).

Electricity lines in Germany.
Image Credit: Shutterstock

Well, Craig Morris of Renewables International reports that the European Union (EU) has now determined that the grid fee exemptions are illegal, that they are unfair subsidies. “Overall, it’s good news because these exemptions have not only distorted competition between nations, but also between large and midsize German firms – and have led to an absurd outcome in terms of efficiency.”

While this is only for the grid fees, I think it does set an important precedent, and the same ruling could eventually be made regarding renewable energy surcharge exemptions. It seems to me like that is an obvious extension of the ruling that should be pursued, but Craig doesn’t really discuss that, so maybe I’m missing something.

Regarding the renewable energy surcharge exemption, Craig has more specifics for those of us not as tied into or knowledgeable about the details of the German system: “Energy-intensive firms that face international competition do not pay the full 5.28 cents per kilowatt-hour, but rather only 0.05 cents.”

And some more details on the now-illegal grid fees: “Firms that consume more than 10 gigawatt-hours per year over at least 7,000 hours in a year do not have to pay anything for grid usage – even though they rely on the grid the most.”

For more context around these grid fees, the renewable energy surcharge, potential governmental shift regarding the renewable energy surcharge exemptions, and the implications for energy-intensive German industry, check out Craig’s full article: “EU cracks down on German energy policy.”

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Tags: Electricity, Germany, germany electricity, Germany grid fee exemptions, Germany grid fees, Germany renewable energy law, Germany renewable energy surcharge

About the Author

Zachary Shahan spends most of his time here on CleanTechnica as the director/chief editor. Otherwise, he's probably enthusiastically fulfilling his duties as the director/editor of Solar Love, EV Obsession, Planetsave, or Bikocity. Zach is recognized globally as a solar energy, electric car, and wind energy expert. If you would like him to speak at a related conference or event, connect with him via social media. You can connect with Zach on any popular social networking site you like. Links to all of his main social media profiles are on ZacharyShahan.com.

http://profiles.google.com/ivor.oconnor Ivor O’Connor

Seems complicated to me. What exactly is this grid fee suppose to pay for? Is it for the hook up and maintenance of the connection? Without knowing the full picture I don’t want to throw stones.
- ThomasGerke
  
  Excuse if I answer in too general ways:
  In Germany / EU the electricity market was liberalized in the late 1990s. In Europe that means that instead of regulated vertically integrated utilities operating as a regional monopoly, the functions of such a monpoly have been split up. Today stuff like power generation, transmission, distripution, sales,… are seperate enterprises with more or less competition.
  
  Since the grid is a natural monopoly, it remains a regulated market. The grid fees are what electricity traders have to pay/charge for using the grid, when selling electricity to customers. How high the grid fees are, depends on which grid level customers tap into the grid.
  
  All grid fee payments feed into a big pile of money that funds the transmission grid, the distripution grid(s), several hundred thousend transformer stations and balancing power plants (system services to keep the grid stable).
  
  A few years ago the government has excempt big consumers from grid fees => increasing the grid fees of the rest of the customers.
  
  Now the EU (AND a German court) crack down on these excemption that can only be seen as special favours too some special interessts. (an industry lobbyist has been very successful )
  
  The excemptions are aditionally questionable, because despite much ado nothing, the grid fees are actually about 20% lower than they were 7 years ago.
  - http://profiles.google.com/ivor.oconnor Ivor O’Connor
    
    Thanks Thomas but I’m still where I started from in terms of understanding. Though it is good to know the monopolies were broken to some extent that are still driving us bonkers here in America. Let me explain my concerns that did not get answered.
    
    It seems possible to me that much of the costs involved in maintaining a grid is due to individual hookups. It is possible that each location may cost on the order of X euros to maintain a year. Whether the location uses 1kWh or 10,000kWhs. These grid owners may simply be trying to extract X euros to cover X costs per year, with a little markup, and the public may not realize it. So if they charge the household that is consuming only 1kWh a rate of Y and the factory consuming 10,000kWhs a rate of .001Y it could be said they are subsidizing household consumers yet the public sees it in just the opposite way.
    
    There must be a reason why these large utilities are doing what they are. I’d like to get a real understanding.
    - Hans
      
      “It seems possible to me that much of the costs involved in maintaining a grid is due to individual hookups.”
      
      This is not the case. Most costs are for building and maintaining transmission lines (on all voltage levels), transformer stations and for balance control. The costs of hooking up to the grid are peanuts compared to that.
      
      In Germany the way grid fees are calculated is not set by the utilities*, but by the government. It choose to subsidise energy intensive companies like aluminium melters by exempting them from the grid fee, and thus increasing the fees for normal households and small companies. There is no cost-based rational behind it as you seem to think.
      
      * utilities in the old sense don’t exist anymore because the utility companies have been broken up.
      - http://profiles.google.com/ivor.oconnor Ivor O’Connor
        
        That would be great. These numbers need to be published though to remove all lingering doubts. People need to see where the money goes so they can make up their own minds. Nobody trusts energy monopolies for good reason.