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Energy crisis in Germany: Why green electricity is currently so expensive


High gas and oil prices make the headlines. But why is energy from the sun and wind currently so expensive? Two explanations. And ideas on how you can still obtain green electricity.

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Photo: Daniel Bockwoldt / dpa

I have had my electricity contracts with tough green electricity providers for years.

In other words, with suppliers who do not just buy green electricity on the exchange, but also have wind or solar parks operated themselves or buy the electricity generated directly from the owners of a hydroelectric power station.

In technical jargon, the more or less long-term agreements required for this are called PPA contracts (Power Purchase Agreements).

This kind of green electricity was a bit more expensive in the past.

But I knew that this was used to build new plants for green electricity generation and I knew exactly where the electricity came from.

However, I cannot see that this electricity should become more than 50 percent more expensive in the spring of 2023 - from 26.1 to 42.9 cents gross per kWh.

After all, the sun still shines for free and ecological power generation is largely part of the established company business of such green electricity providers.

New sweeping costs in production are not to be expected.

The wind blew so hard in 2022 that Germany was probably Europe's electricity export champion last year.

So what to do in view of the exorbitant price increase?

First of all: protest and disagree.

I'm familiar with protest, because I grew up with the "fast breeder" on the Lower Rhine right under my nose and I'm still happy today that this nuclear adventure was cancelled.

The breeder was never commissioned;

a Dutch company finally turned the cooling tower on the Rhine and the billion-dollar power plant site into an amusement park. 

Two explanations for the high prices

If you protest and ask, you will actually get answers.

After some back and forth I was able to speak to the manager of my electricity provider.

When asked why prices should rise so sharply, he gave two answers.

First: Some operators of wind and solar parks have significantly increased their prices for electricity providers, including ecological ones, in the past few months.

SPIEGEL had already written about "fairytale profits" for producers of green electricity.

According to the managing director, the higher prices were also reflected in the PPA contracts concluded last year.

I also received a letter of increase from the Schönau electricity works.

The self-proclaimed eco-electricity rebels from the Black Forest informed their customers that their suppliers "are also based on the traded market prices, since they could alternatively sell the electricity they generate on the exchange".

And electricity is still sold on the exchange according to the merit-order model.

In short, the price for the most expensive electricity that is still needed determines the price for all electricity sold on the exchange.

And this most expensive electricity is often produced with high-priced gas, so solar and wind power producers can achieve particularly high profits.

Second answer from the managing director of my electricity provider: Various fees have increased, which has led to an increase in costs that must and will be passed on to customers.

Above all, the network usage fees have been raised, in some cases doubled.

Market model and skimming mechanisms

But there is also a third explanation, and the Hamburg green electricity provider calls it Green Planet: The traffic light government is complicit in the high prices, writes Carolin Dähling, Green Planet's communications manager, in an industry newsletter.

The government has overshot the mark in trying to skim off the extra profits of the electricity companies and is destroying the PPA model for inexpensive solar power during the term of the electricity price brake until spring 2024.

The reason: The government has now stipulated that the operators of existing wind and solar systems are taxed for new contracts from November 2022 as if they had sold their electricity on the stock exchange.

This also applies if the electricity was actually sold via PPA contracts, i.e. direct supply agreements between producers and suppliers, and not on the exchange.

One can guess why the government came up with the idea in view of the merit order principle and fabulous profits.

RWE easily doubled its profit from the electricity division in 2022.

Nevertheless, Dähling's argument has merit.

If a producer doesn't want to take part in the hype on the stock market or belongs to the electricity marketer's group of companies and should therefore actually offer ecologically cheap, he will still be urged to take the moon prices from the stock exchange.

Because nobody wants to take the risk that the tax office will act as if the solar park operator had sold at a high price on the stock exchange.

When calculating with such fictitious exchange prices, the state saves itself from checking the individual contracts of the electricity providers and can still skim off possible extra profits.

The model with the fictitious prices of the stock exchange is necessary "to avoid circumventing the skimming through creative new contracts and contract adjustments for existing systems," says the Federal Ministry of Economics on the subject.

In the past few days, however, the ministry has not complied with my request to explain this to me in detail.

Do it yourself instead of trusting models

This initially throws back customers with green electricity contracts.

After all, the message for them is that the sun is cheaper than gas and nuclear power.

But the price advantage does not go down well with customers.

If you really want to benefit from the free sun, you have to generate your green electricity yourself.

Either by installing a solar system on the roof, in the garage or in the garden.

Or by installing a balcony power station on the balcony or terrace.

more on the subject

  • Plugs and electricity meters: Trouble with connecting balcony power plants

  • Generating your own energy: This is how the carport becomes a mini power plant by Ralph Diermann

You can simply connect these balcony power plants – they are actually mini photovoltaic systems – to the socket.

The Association for Electrical, Electronic and Information Technologies (VDE), which is responsible for safety and standardization in the field, last week gave up its opposition to the current for the socket without expensive extra security installed by the electrician.

The actually conservative association is now even in favor of allowing the use of balcony power plants together with an old electricity meter.

Such old electricity meters run backwards if the solar power generated is not used directly in the household.

In order to prevent this, owners of balcony systems often had to have a more modern meter installed.

The new VDE dictum:

"Counters should also be allowed to run backwards within the framework of the de minimis limit." This de minimis limit should be 800 watts of power.

Electronic electricity meters that no longer run backwards will only be gradually installed nationwide in the coming years.

Use the electricity price brake with the balcony power plant

The easy way to the balcony power plant is particularly interesting for anyone who is considering how to use the rules of the electricity price brake for themselves and throttle their electricity consumption to 80 percent of the previous year or even less.

Every kilowatt hour of electricity from the balcony power plant then saves over 40 cents, sometimes over 50 cents.

The small investment becomes really lucrative.

For example, if you can set up two 300-watt modules on the south-facing balcony, they can produce up to 600 kilowatt hours (kWh) of electricity per year.

If the electricity costs you 45 cents per kWh, that reduces your electricity bill by 270 euros a year with a counter running backwards – which will soon be permitted.

800-watt modules on the south-facing terrace, which produce 800 kWh a year, even bring in 360 euros a year.

Oh yes, and since the beginning of January you can buy the systems without VAT and therefore cheaper.

Solar system on the roof - save even more

You can do a similar calculation for a large solar system on the roof or in the garage.

However, there will never be counters that run backwards with such systems.

Modern electronic meters have been mandatory for house solar systems for years.

This means that you mainly benefit from the electricity that you use yourself.

Of course, in future you can leave the washing machine and dishwasher running at lunchtime and hang your electric car on the wall box in the garage.

But you can hardly use more than a third of the electricity generated.

The remaining electricity from your system does not pay off that much, even if you get an additional feed-in tariff of 8.2 cents per kWh fed in from the grid operator.

The only remedy is your own battery storage or rechargeable battery.

This enables households to use up to 70 percent of the electricity they generate themselves and thus save.

The system should then be the right size for your electricity consumption, including future e-cars or a heat pump for heating.

You can probably get a good and inexpensive system from your electrician.

In addition, always compare the prices offered by other providers on portals.

Incidentally, normal systems for your home have been exempt from VAT since January.

And returns on self-generated electricity that you sell to your local power company are tax-free.

One last tip: In any case, check what subsidies are available in your state and municipality - both for large photovoltaic systems and for the mini versions for the balcony.

Good luck in your search for a handyman.

If the construction boom dies down now, your chances will increase.

Source: spiegel

All business articles on 2023-01-21

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