Germany cuts renewables levy for 2022 to 10-yr low

Germany's Federal Network Agency has reduced the renewable energy levy, or the so-called EEG-levy, that consumers will pay with their electricity bills in 2022, to a ten-year low of EUR 0.0372 (USD 0.043) per kWh amid increasing spot prices of electricity.

The tax to be paid next year is nearly 43% lower than the levy in 2021 which was capped at EUR 0.065 per kWh, the Bundesnetzagentur said on Friday. The levy was below the EUR-0.04-per kWh threshold in 2012 for the last time when it stood at EUR 0.0359.

The reduction is not surprising as the increasing spot price of electricity reduces the need for subsidies for renewables. The reduction is also meant to partly dampen the effect of rising prices.

The EEG-levy is meant to support the expansion of renewable energy in Germany and cover the difference between the market price and the market premium paid to electricity producers. The reduction will be financed with proceeds from the introduction of a carbon price.

The EEG-levy and federal subsidies next year will total EUR 20.1 billion, covering the difference between what the country's transmission system operators will need to pay for renewable enegy -- EUR 33.7 billion -- and the expected electricity exchange revenues of EUR 13.6 billion.

According to the operators, the renewable energy capacity to be installed in 2022 will total 8.2 GW, driven mainly by solar power, while green electricity generation is expected to grow almost 5% to 239 TWh.

(EUR 1 = USD 1.160)

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