Germans May Pay More for Green Power in Quirk of Corona Impact

(Bloomberg) -- German power consumers may have to stump up more money to support green power next year as the corona crisis erodes demand for electricity.

The reason is a quirk of the nation’s green support program. Consumers pay the difference between the fixed payments that owners of clean energy sources such as wind and solar get for their electricity and the wholesale price for the power. Market rates have plummeted since the Covid-19 crisis crippled energy demand.

Every October, Germany’s grid operators estimate the average difference between the costs for the following year, which is added to power bills. This year’s surcharge was set at a total 26.2 billion euros ($28 billion), helping make the country’s power bills the highest in Europe.

The outlook that bills may jump again next year is sounding alarm bells. The green surcharge is set to rise “very strongly” next year, Olaf Lies, the environment minister for the state of Lower Saxony state, said in a note sent on Tuesday.

Benchmark German power prices for 2021 have fallen 20% this year.

Lies urged the government in Berlin to cut the surcharge permanently, passing on the benefits of green power to consumers without them paying record amounts for it.

©2020 Bloomberg L.P.