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Germany hikes electricity charge to finance renewables

Richard Carter
German Chancellor Angela Merkel gives a speech during the inauguration of the Baltic 1 offshore wind farm operated by German energy supplier EnBW in Zingst, northeast Germany, in May 2011. Germany's electrical grid operators said they were raising by nearly half the charge to consumers used to finance subsidies for renewable energy as the country phases out nuclear power.

Germany's electrical grid operators said they were raising by nearly half the charge to consumers used to finance subsidies for renewable energy as the country phases out nuclear power.

Consumers will be asked to pay 0.05277 euros ($0.06839) per kilowatt hour of electricity consumed in 2013, the firms announced, compared to a 0.03592-euro surcharge this year.

For an average three-person house, this 47-percent increase amounts to an additional 60 euros per year, taking overall add-on power taxes up to about 185 euros.

In total, the network operators hope to collect more than 20 billion euros to subsidise renewable energies.

On Thursday, German Environment Minister Peter Altmaier said that the Germany, with Europe's top economy, wanted to have 40 percent of its energy needs from renewable sources by 2020, up from a previous target of 35 percent.

By 2050, the government aims to supply four-fifths of Germany's power needs from alternative energy sources such as solar or wind energy.

"It's clear that the energy switch-over that we all want and that I want to succeed, won't come free," he told Monday's edition of mass-circulation daily Bild.

Claudia Kemfert, from the DIW economic institute, warned that the poorer-off in society needed to be shielded from the hike but stressed that the renewable energy sector in Germany would continue to create jobs.

"The increase in this charge is manageable for many households, but there are also very poor, low-income households which could be negatively affected by this type of price rise," she said.

"We need to think about ways to help these households financially, so they can save energy and electricity," she added.

Nevertheless, the renewables sector already employed 400,000 people in Germany and "this number will rise," she noted. "Therefore, this is a positive development for Germany."

However, an association representing the chemical industry slammed the rise as a "bottomless pit."

Firms that use a lot of electricity, such as the chemical sector, can apply for an exemption in paying the charge or benefit from a lower amount. More than 2,000 companies have applied for special treatment for next year.

Karl-Ludwig Kley, head of the German chemical industry association, said: "The costs for consumers and industry of the electricity price charge for renewable energy has risen to an unbearable degree."

The costs for the chemical sector would rise from 550 million euros this year to 800 million euros in 2013, Kley said.

Germany decided in the immediate wake of Japan's 2011 Fukushima nuclear plant disaster to shut down its nuclear reactors by 2022 and ramp up the use of renewable energy.

Chancellor Angela Merkel has made the so-called "Energiewende", the term used to describe both the end of nuclear power and the promotion of renewable energy sources, one of her government's priorities.

However, the policy has run into difficulties, notably due to technical and financing problems as well as because of local resistance to building new power lines.

In February, Germany was forced to tap into its electricity reserves amid a cold snap, sparking fears that the switch out of nuclear power could result in power shortages.

Germany, one of Europe's biggest countries, it also faces transmission problems, with much of the production capacity offshore in the north but much of the demand hundreds of kilometres (miles) away in the south.

According to the EU statistical office Eurostat, the average household electricity price is 0.253 euros per kilowatt hour, the second highest in the 27-member bloc behind Denmark.