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German renewables surcharge ‘to peak in 2021 and then fall’

Levy will gradually decrease as first-generation plants leave support system, think-tank Agora Energiewende says

The levy to finance Germany’s renewables expansion (EEG surcharge) is likely to rise for a final time next year and in 2021, and will then gradually recede as support for first-generation green power installations ends after 20 years, the Agora Energiewende think-tank said.

“Our calculations show that the EEG surcharge in 2021 will have reached a peak of around seven [euro] cents per kilowatt hour,” Agora Energiewende director Patrick Graichen said.

“Subsequently cost intensive installations of the first generation will lose EEG support and the surcharge will gradually fall.”

A sharp rise in the EEG surcharge earlier this decade led to toxic debate over the cost of renewable energy, which prompted the government of Chancellor Angela Merkel to impose steep cuts to subsidies, and then switch the allocation of most support to tenders.

The levy had declined slightly this year and last, but is expected to rise to between €0.065 ($0.072) per kilowatt hour and €0.067/kWh next year, from €0.064/kWh in 2019, Agora said.

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The rise will come from a rapid increase in offshore wind to an expected capacity of 7.8GW in 2020 from some 6.4GW now. Offshore wind farms commissioned before 2020 still are entitled to relatively high feed-in tariff support before the system switches to tenders.

In addition, large surpluses in the EEG support account from previous years are being leveled off.

Electricity prices for German consumers are expected to go up by around €0.01/kWh next year, as on top of the EEG levy other surcharges on power prices will also rise – such as those for power grids or combined-cycle power plants, Agora calculated.

Germany’s transmission system operators are slated to announce the level of the EEG surcharge for 2020 on 15 October.

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