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ENERGY

Households in Germany to get some relief on electricity bills

There is some relief around the corner for German residents, with the green 'EEG' levy on electricity set to be slashed. However, it may make little difference to bills.

Households in Germany to get some relief on electricity bills
A German electricity bill. Photo: picture alliance / dpa | Jens Kalaene

The cost of living in Germany is going up, but there is some tentative good news. According to German media reports on Thursday, the EEG levy, which private consumers have to pay as part of their electricity bills to finance renewable energies, is set to fall significantly next year. 

According to sources who spoke to DPA, the EEG (Germany’s Renewable Energy Act) levy will drop to 3.72 cents per kilowatt hour. The levy current stands at 6.5 cents. 

A billion-euro subsidy from the federal government will contribute to the reduction. Without this, the levy in 2022 would be around 4.66 cents per kilowatt hour, according to DPA.

The EEG levy, which promises fixed prices to wind and solar providers to try and stimulate growth in the sector, is a major component of electricity bills around Germany.

It’s part of the reason why people in Germany pays the highest prices on electricity in Europe.

READ ALSO: Why German electricity bills are hitting record highs

The operators of large electricity grids plan to announce the amount of the EEG levy for the coming year this Friday. However, it is only one component of the price of electricity for people in Germany. 

According to the comparison portal Verivox, the average electricity price for households in October 2021 will be 31.38 cents per kilowatt hour, higher than ever before. The reduction of the EEG levy to 3.72 cents would lower the current average electricity price by around 11 percent. For a three-person household with an annual consumption of 4000 kilowatt hours, the relief would be around €132.

“However, the reduction of the EEG levy does not mean that electricity prices for customers will automatically fall,” said Thorsten Storck, energy expert at Verivox. 

As The Local has been reporting, energy prices are spiking. 

READ ALSO: How households in Germany can tackle rising energy costs

The procurement costs of the electricity suppliers have risen significantly and there are also signs of increases in the grid utilisation fees.

“We therefore assume that electricity prices will remain at their current record level in the coming year, or at least not fall noticeably,” said Storck.

According to calculations by the comparison portal Check24, all private households in Germany together will be relieved of around €4.2 billion by the falling EEG levy.

In order to relieve the burden on customers, politicians have long been discussing the abolition or reduction of the EEG levy.

Why is the EEG going down?

There are several reasons for the falling EEG levy.

According to an analysis by the think tank Agora Energiewende, the high gas, coal and CO2 prices have led to a sharp rise in the exchange electricity price.

As a result, far less money is needed from the EEG account to compensate for the different costs of renewable energies. Renewable energies therefore achieve higher revenues on the market, and the necessary subsidy sinks.

Meanwhile, EEG plants from the early years, which still received comparatively high payments, have gradually reached the end of their 20-year subsidy period.

First put in place in 2000, and modified several times, the EEG has been credited with rapidly boosted Germany’s production of wind and solar energy.

But it’s come under criticism because private households have to foot the bill – not big industries.  

READ ALSO: Is Germany the green leader it’s hyped up to be?

Vocabulary

Levy – (die) Umlage

Green electricity – (der) Ökostrom

Federal subsidies – (die) Bundeszuschüsse

Electricity bill (die) Stromrechnung

We’re aiming to help our readers improve their German by translating vocabulary from some of our news stories. Did you find this article useful? Let us know.

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ENERGY

German households to receive relief for gas costs ‘starting in January’

To help German residents with skyrocketing energy costs, the government is planning to provide relief starting in January, according to draft legislation.

German households to receive relief for gas costs 'starting in January'

Through the gas price cap, the so-called Gaspreisbremse, both German residents and companies will receive retrospective relief for their gas costs starting in January 2023, according to the draft. 

Previously the relief payments were set to stretch between March 2023 and spring 2024, with 25,000 larger businesses, as well as almost 2,000 hospitals and schools to receive the help starting in January. 

READ ALSO: How much could households save under Germany’s new price cap?

The German government is reacting to the sharp rise in energy prices with energy price brakes worth billions and wants to soften the blow on both private households and companies. 

Germany will also be divvying out a one-off energy relief payment in December.

READ ALSO: When will people in Germany get their December gas bill payment?

How much will households and businesses receive?

Under the gas price cap, households and small and medium-sized enterprises are to receive a guaranteed gas gross price of 12 cents per kilowatt hour for 80 percent of their current consumption. For the remaining 20 percent of consumption, the contract price is set to apply.

For district heating, the guaranteed gross price is to be capped at 9.5 cents. 

Starting in January, a gas price brake is also planned for industry. These large consumers are to receive a guaranteed price of 7 cents per kilowatt hour net for 70 percent of their previous consumption volume.

The largest part of the energy price brake is to be financed by a “defence umbrella”, or special reserve, totalling up to €200 billion. The government is still taking on new debt in order to finance the energy caps. 

Russia’s war against Ukraine has increasingly aggravated the situation on the energy markets in Germany and Europe in the course of 2022, the draft states. 

In particular, the recent large price increases for natural gas and heat represent a “considerable, in some cases existence-threatening burden for residents and companies in Germany,” it continued. “They are an enormous socio-political and economic challenge.”

Vocabulary

relief – (die) Entlastung

Natural gas – (das) Erdgas

Consumption – (der) Verbrauch

cushion/soften a blow – abfedern

We’re aiming to help our readers improve their German by translating vocabulary from some of our news stories. Did you find this article useful? Let us know.

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