German government agrees to end renewable energy tax in July

March 10 (Renewables Now) – The German government has approved a bill that would abolish the renewable energy surcharge, paid by consumers with their electricity bills, effective July 1, 2022.

The proposal, which was made by the Ministry of Economics and Climate Protection, also envisages legislative changes that would force energy companies to pass the change on to end consumers and reduce electricity prices.

The bill will now be forwarded to the federal parliament, the Bundestag, for decision. Approval from the Bundesrat, the legislative body representing the 16 German states, is not required.

The ruling coalition has decided to bring forward the abolition of the tax to mid-2022 from the start of 2023 in a bid to ease the burden on electricity consumers amid rising prices. The removal of the tax is expected to reduce the annual electricity bill of a four-person household by around EUR 300 compared to 2021. This year, consumers pay a tax of EUR 0.0372 per kWh after EUR 0.065 per kWh in 2021.

The EEG tax was introduced in 2000 to finance the expansion of renewable energy in Germany and to cover the difference between the market price and the market premium paid to electricity producers. After its removal, the deployment of more green capacity will be supported by funding from the Federal Climate Fund. The change will weigh on the fund by around 6.6 billion euros ($7.25 billion).

(1 EUR = 1,099 USD)

Sign up for the free daily Renewables Now newsletter now!

James R. Rhodes