German Electricity Rates to Return to 2015 Levels by 2035

Written by Gerry Runte

German Electricity Rates held down by the impact of renewable energy

In 2015 Germany enacted a law whose short title is the Renewable Energy Sources Act of 2014 (Erneuerbare-Energien-Gesetz, or EEG 2014). EEG 2014 formalizes the fundamental shift in energy policy in Germany, the Energiewende, from a coal and nuclear system to one which requires the mix of electricity generation in Germany to reach 40% – 45% renewable sources by 2025 and 55% – 60% renewable sources by 2035.

This is to be encouraged by feed in tariffs that guarantee prices for new renewable entrants while requiring grid operators to receive and purchase electricity from these sources. As expected, EEG 2014 met with some criticism, primarily a claim that it would be too expensive.

Agora Energiewende, an energy policy group, commissioned the Oeko Institute e.V. to model the effects of EEG 2014 specifically on its likely impact on consumer electricity rates. The report concluded that:

  • The cost of electricity to consumers increases through to 2023 by between one and two cents per kwh, but then declines at a rate of between two and four cents/kwh until 2035. In 2035 rates are forecast to be the same as 2015 – 8 to 10 cents/kwh.
  • By 2035 60 percent of German electricity will come from renewable energy sources, from about 28% today.
  • As the real costs for renewable generation decline, the primary drivers to the incremental costs of the German Energy Plan become the actual demand levels and the extent to which energy intensive industries are subsidized.
  • Investments in renewable energy increase through 2023 and then decline, however renewable energy’s share of the generation mix continues to rise.

The assumed generation mix that was used in the reference case for this study is presented in the figure below:

EEG 2014 Reference Case - Generation Mix
EEG 2014 Reference Case – Generation Mix. Source: Oeko Institut 2015, EEG Model

This translates to the following projected share of the overall electricity source mix for renewables:

Renewables Share of Total Electricity Mix 2010 - 2035
Renewables Share of Total Electricity Mix 2010 – 2035. Source: Oeko Institut 2015, EEG Model

EEG 2014 provides for the following feed in tariffs, cents/kWh:

2015 2025 2035
Onshore Wind 8.9 7.2 5.3
Offshore Wind 19.4 14.3 10.9
Solar 11.0 10.3 8.4
Biomass 17.7 16.0 14.5
Geothermal 25.2 19.6 15.2
Hydro 11.7 11.2 10.6
Average Mix 14.8 10.6 8.1

Source: Agora Energiewende

Note that the system average feed in tariff declines over time. Nonetheless, these tariffs are significantly higher than wholesale power costs from conventional sources. Under EEG 2014, transmission system operators (TSOs) are permitted to charge electric utilities an “EEG Levy” to compensate them for paying these feed in tariffs and the utilities pass these charges on to consumers.

The EEG Levy assumed in this analysis, along with the base cost of electricity, is shown in the following graphic.

EEG Levy and Basic Bill costs in Cents per kWh
EEG Levy and Basic Bill costs in Cents per kWh. Source: Oeko Institut 2015, EEG Model

Based on the assumptions inherent in this analysis, the overall cost of electricity to the consumer rises a few cents in the early 2020’s and then declines to rates comparable to rates experienced in 2010.

The Big Loophole

Not all consumers are subject to the EEG Levy, however. Many electricity intensive industrial and commercial end users have received exemptions from the EEG Levy, a point of considerable controversy in the country. Some 58 TWh are totally exempted and 110 Twh are partially exempted.

Most notably residential customers pay full freight. Were there less exemptions, the EEG Levy would be much lower, as shown in the figure below. No exemptions for any customer basically cuts the levy in half.

Reference vs. althernative subsidy exemptions
Reference vs. althernative subsidy exemptions. Source: Oeko Institut 2015, EEG Model

The EEG Levy cannot be viewed in isolation, however. No doubt, applying the levy to all industries would have some concomitant effect on the economy and some exempting is necessary. That said, however, even with loopholes, maintaining a relatively flat trajectory on consumer rates while radically increasing the renewable energy mix in electricity generation to over 60% will be quite an achievement.

Gerry Runte is Managing Director of Worthington Sawtelle LLC a consulting and research firm which provides a full portfolio of business planning and strategy services to both new and existing participants in emerging energy markets.

Recent engagements include market assessments, policy analysis and development; business strategy; go-to-market planning and launch; product commercialization strategies; feasibility studies; and due diligence on behalf of investors.

Gerry has 38 years of experience in the energy industry, much of which at the executive level. He holds a B.S. and M.Eng in Nuclear Engineering from Pennsylvania State University. Contact gerry.runte@worthingtonsawtelle.com; tel: +1 (207) 361-7143; skype: gerry.runte

Ubitricity streetlamp plug-in charges German EV’s

by John Brian Shannon
Originally published at JohnBrianShannon.com

One major impediment to the adoption of electric vehicles is the high cost of public charging stations for EV’s, as the charging units are very expensive.

Ubitricity.de has come up with a novel solution whereby ordinary streetlamps could be fitted with an electric vehicle charging point for the reasonable cost of 500 to 800 euros per streetlight, which is certainly more doable than the 10,000 euros of your typical EV public charging station in Europe.

Ubitricity.de - Reuters screenshot
Ubitricity.de – Reuters screenshot

>> Click here to see the Reuters Ubitricity video. <<

Streetlamps in selected cities within Germany are now being fitted with a charging point allowing electric vehicle drivers to recharge their car battery.

Drivers prepay the cost of the electricity via Ubitricity to charge at these locations. Ostensibly, every streetlamp post and parking meter in Europe could be fitted with one of these charging points.

Not only do German drivers have the option of charging their EV’s at home, now they can now pick up a charge while they shop, have coffee with friends, or while they spend the day at their workplace.

“We are convinced there is room for this technology to be applied everywhere it’s needed, but we think that in most places there is a pressing need for investment in a charging infrastructure to allow the installation of charging points, not only here on lamp posts, but also in the workplace, at home and in underground carparks.

Governments are keen to cut the number of gas guzzling cars on the roads to reduce greenhouse gas emissions. Many are offering cash incentives to drivers to buy electric. But take-up has been slow partly due to the lack of charging stations.

There are lots of lamp posts which are already very well connected to the electricity network. Equipping a lamp post costs between 300 and 500 euros, depending on the circumstances at that location. When you consider the production price of our charging sockets, it is a long way from the 10,000 euros which must typically be invested in a charging station.” Founder of Ubitricity, Frank Pawlitsche

All you need is an Electric Vehicle, your prepaid Ubitricity account and Ubitricity connector cable, and you’re set

Ubitricity portable, streetlight-attachable EV charging unit
Ubitricity portable, streetlight-attachable EV charging unit

The great thing about the Ubitricity parking spots with their electric vehicle recharging connector is that they’re normal parking spots with a charging port added. Your mobile phone app displays the Ubitricity locations.

You can park there all day and return to a car that is fully energized and ready to go! No more petrol stations for you.

It’s a wonderful idea. Streetlamps and parking meters are everywhere it seems and combining a parking spot with an EV charging port is a stroke of genius.

Boy those Germans are smart. Gut gemacht! (Well done!)

Driving electric is a cornerstone of Germany’s Energiewende energy policy

Only when driving on renewables will EV users avoid greenhouse gas emissions — not just locally but on a global scale. Renewable energies and EVs are natural partners of a sustainable energy and transportation sector. — From the Ubitricity website

Not only Ubitricity — but also BMW is getting into the act

BMW i3
BMW i3 receiving a charge at a Ubitricity charge point. Image courtesy of ubitricity.de

Drivers of the much-loved BMW i3 electric vehicle will soon have their own BMW charging network and software to guide you to nearby charge points.

Eventually, BMW will build their network across Europe to facilitate EV travel across the continent.

BMW has a vision to offer buyers their choice of petrol powered, or as an option, electric powered, or hybrid/electric powered cars across all model lines.

BMW is also famous for installing wind turbines, solar panels, and biomass power plants at it’s German factories, and going completely off-grid!

It also has plans to get into the consumer electricity business throughout Europe.

You’ll soon be able to buy a BMW car and a BMW motorcycle for your driveway and BMW electricity for your home and office. All produced by renewable energy and only renewable energy.

A note about TESLA Model S drivers and their unique charging situation/opportunities

TESLA Model S at a SuperCharger location.
A TESLA Model S receiving a charge at a typical TESLA SuperCharger location. Image courtesy of edmonds.com

All TESLA vehicles can access the Ubitricity chargers but don’t forget to bring your Ubitricity charging cable — unlike the TESLA SuperCharger stations where the cable is permanently attached to the SuperCharger unit.

A benefit of TESLA SuperCharger top-ups is that they usually take 10-15 minutes. Look, there’s a Starbucks!

Another benefit is that (TESLA Model S drivers only) enjoy free charging at TESLA SuperCharger stations for the life of the car because that’s what you get for 70,000 euros.

But once your TESLA is charged, you must return to move your car in order to let other TESLA drivers access the SuperCharger, much like gas-engined drivers can’t leave their car in front of the gas pump while they go shopping.

Only the Ubitricity solution gives all EV drivers a convenient parking spot — and a charge. The ability to simply ‘Park and Plug’ at one location in today’s crowded cities is a very big plus indeed.

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