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ENERGY

Why households in Germany will soon face gas bill hikes

Gas bills in Germany will likely rise significantly later this year as a new law is set to come into force in October allowing companies to pass on rising prices to consumers.

A person turns the radiator on
A person turns the radiator on. Gas bills are set to go up in Germany. Photo: picture alliance/dpa | Fabian Sommer

A Gasumlage – or levy – is expected to apply from October 1st until the end of March 2024, according to Economy Ministry sources. 

The levy is aimed at relieving pressure on struggling suppliers by allowing them to pass on up to 90 percent of the extra costs of soaring gas import prices to consumers. 

READ ALSO: Germany must use less gas, warns regulator 

The higher costs affect all gas customers – whether private households or companies – in Germany, including those on long-term contracts who have already agreed fixed payments. It is unclear whether customers will see cost increases immediately after the levy is brought in.

It’s also not clear at this stage how much the increase will be for households. German Chancellor Olaf Scholz warned last week that a four-person household could expect an increase of €200-300 per year.

Federal Economics Minister Robert Habeck on Thursday suggested the levy could range between 1.5 and 5 cents per kilowatt hour, but that this would depend on several factors, including procurement costs.

Asked about an estimated cost for a family of four, Habeck said that if the average consumption was 20,000 kilowatt-hours of gas per year, it could end up being not far off Scholz’s estimate.

He said it was not yet possible to say exactly how high the costs would be. “But the bitter news is it will certainly be a few hundred euros (extra) per household”.

Habeck said it was a “difficult step that entails a high burden”.

The levy will be decided at the end of August. 

‘You’ll never walk alone’

As the Local has been reporting, Russia has been slashing gas deliveries to Europe. Before Russia’s war on Ukraine, Germany relied on Russia for 55 percent of its natural gas. Germany has reduced its dependence, but still relies on Russia for more than a third of its gas.

Around half of all homes in Germany are heated with gas.

In view of the situation on the gas market, the levy is needed to maintain the gas supply in the coming winter, said experts.

“Without it, gas suppliers throughout the supply chain would be at risk,” the Economy Ministry said. 

READ ALSO: ‘Difficult winters ahead’: Germany sets out emergency energy saving measures

The levy will be the same amount for all suppliers. Details are to be regulated in an ordinance based on the Energy Security Act, which is set to be passed in the cabinet soon. 

While announcing last week that the government was set to bail out German gas giant Uniper, Chancellor Scholz also pledged to put in place more energy relief measures for households to cushion the burden.

“You’ll never walk alone,” Scholz said in English.

READ ALSO: Scholz promises more energy relief measures as bills rise

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ENERGY

EXPLAINED: What are Germany’s alternatives to Russian gas?

With the country facing an energy crisis this winter after Russia cut natural gas deliveries, we look at what alternatives Germany has and how clean they are.

EXPLAINED: What are Germany's alternatives to Russian gas?

Even as a country with a strong environmental tradition, Germany is set to struggle this winter as it searches for green alternatives to Russian gas for both its heating and electricity needs.

Around half of German households use natural gas for heat and, with Russia having cut supplies by 80 percent, the average household is now looking at having to pay more than €500 a year extra for natural gas starting from October.

Experts are warning of a “winter of rage” characterised by protests and even riots. The gas levy, in which German gas suppliers are passing on a hike of 2.419 cents per kilowatt hour to consumers, has the federal government looking at ways to ease the burden – including possibly scrapping VAT on the levy.

Though gas use is down 14 percent so far this year, with Germans taking shorter, colder showers, and cities like Berlin and Cologne turning the lights off on some of their most famous landmarks at night, the real test will come this winter. 

So what alternatives does Germany have to Russian gas?

READ ALSO: EXPLAINED: How much will Germany’s gas levy cost you?

Renewables

Already, nearly half of all electricity produced in Germany comes from renewables, particularly solar power, after large investments in capacity from 2009 to 2012.

German economist Christian Odendahl argues that this figure would probably be higher today if those investments had continued.

“During sunny days like today, renewables would probably generate 100% of our power,” he tweeted.

At the same time, less than 20 percent of the energy Germans are actually consuming currently comes from renewables. Meanwhile, gas makes up 27 percent of the energy Germans actually use. Despite the increased renewable capacity – there’s still a long way to go before it will be able to replace gas.

READ ALSO: How Germany is saving energy ahead of uncertain winter?

Nuclear Energy

Germany’s current energy crisis has moved German politicians and public opinion towards something previously unthinkable: more support for nuclear energy. 41 percent of Germans are now in favour of long-term nuclear energy use.

Over three-quarters want to continue using it for at least a little while longer, while only 15 percent want to shut down the country’s three remaining nuclear power plants by the end of the year.

Opposition to nuclear energy is one of the reasons the German Green party – currently a member of the traffic light coalition government – was originally founded and gained popularity. The move to shut down nuclear power in Germany by the end of 2022 has found wide public and political support for decades, with opinion polling shifting only recently.

The government is currently debating whether to extend the life of existing nuclear power plants beyond the end of this year.

Alternative natural gas and coal

On a trip to Norway this week, Chancellor Olaf Scholz thanked the Scandinavian country for increasing its gas deliveries to Germany by about 10 percent – amidst warnings that Norway was already sending Germany about as much as it could deliver.

At the same time, work has begun on five temporary terminals for importing liquefied natural gas (LNG) on ships from gas-producing countries like the United States and Qatar. Some of the temporary terminals, which are located in Wilhelmshaven, Brunsbüttel, Stade, and Lubmin on the northern German coast, could be finished as early as the end of this year.

There are also plans to start construction on two permanent terminals at Wilhelmshaven and Brunsbüttel before the end of this year.

Environmental groups, however, are already protesting against the construction of the terminals.

At the same time, German coal plants resumed operations in early August, amidst concerns both moves could put Germany’s climate goals in jeopardy.

READ ALSO: Could Germany’s gas supplies last the winter?

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