Higher renewable energy subsidies due to be introduced in October will add an extra €40 onto the annual energy bill for a three person household, wrote Der Spiegel magazine in a report published on Monday.
The cost of supporting German producers of renewable energy is, under German law, passed on to the consumer. The cost per kilowatt hour of green energy is simply added onto their bills.
Set every October for the following year, this year the cost is set to jump 20 percent from 5.3 cents per kilowatt hour to 6.5 cents, wrote the magazine.
Perversely, the price hike is necessary because the electricity market is actually being flooded with cheap electricity, wrote the magazine.
Germany’s green energy producers have been guaranteed fixed rates feed-in-tariffs for 20 years, while recently the electricity stock market price has fallen to its lowest value in years.
This has led to a widening gap between the falling prices grid operators are able to sell electricity for on the market, and the fixed guaranteed prices they have to pay out to producers of renewable energy. The result is that consumers have to make up the difference.
The news will be unwelcome for Angela Merkel’s government as it heads into elections next month – facing accusations from the Social Democrat opposition that ordinary consumers are being asked to pay too high a price for Germany’s energy transition.