Trend opinion 
Electricity is becoming ever more expensive due to the higher EEG levy. Renewable energy is responsible for the rise in electricity prices, because it is so highly subsidised.

Facts
The fact is that the state does not pay any subsidies nor use any money from taxation. The sale of EEG green electricity on the exchange leads to falling power and purchase prices. As a result, the EEG levy increases. The higher EEG levy is passed to consumers on by the power traders, but falling purchase prices for electricity are not passed on.


1. Exchange power prices fall – Power traders profit from this
Electricity is traded on the electricity exchange in two market segments. It can be observed that prices for electricity are falling in both market segments.

a. Power trading on the spot market
On the electricity exchange’s spot market, electricity market contracts are traded, which are delivered on the same day or the following one (intraday or day ahead trading). Power generated within the framework of the Renewable Energies Act (EEG) is also marketed on the spot market as grey power, together with electricity from other energy sources. Due to the rising proportion of green electricity, the exchange electricity prices on the spot market in Germany have fallen sharply. As compared to the same period last year, the price for base load power from January to December 2016 has fallen on average by 8.2 percent from 3.16 cents per kWh to 2.90 cents per kWh. In comparison to France, base load power from January to December 2016 in Germany was some 21 percent cheaper than in its neighbour.

baseload epex
b. Electricity trading on the futures market

Of more importance for electricity price setting than the spot market is the trading of electricity futures on the futures market. Here the power traders already now purchase future electricity quotas for the coming year at set prices. On the futures market too, due to the growing proportion of green electricity and despite Germany having abandoned nuclear power generation, electricity prices have continued to fall significantly since the start of the year. As of December 2016, the future price per kWh for electricity to be supplied in 2017 is 3.2 cents per kWh.

futures eex
2. The consumer does not benefit – Power traders pass on rising EEG levy

As the decline in exchange electricity prices on the spot and futures markets is not passed on correspondingly to consumers, it is above all the purchasers of power who currently profit from this trend. On the other hand, the costs for the  EEG levy are fully factored into the electricity price, so that a unilateral increase in electricity prices arises. The lower the exchange power price obtained for EEG electricity and the higher the amount of EEG electricity generated, the more sharply the EEG levy increases. In the media and in public perception, the focus is only on the increase in the EEG levy. The drastic price reduction effect to be observed on the electricity exchanges is not addressed at all.



Links

1. Persistently falling electricity prices drive EEG levy for consumers, IWR press release (in German) 02.08.2012
2. Electricity prices are falling in Germany, and not only for consumers, IWR press release (in German) 05.07.2012
3. Falling exchange electricity prices drive electricity costs for consumers, IWR press release (in German) 04.06.2012
 
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