Levies, charges, and taxes make electricity expensive – and hinder the switch to the climate-friendly, electricity-based alternatives that we urgently need. Yet many companies and consumers have long been ready to make the change. The technology is already available, often from German manufacturers, who have been waiting for years for a market breakthrough. Instead, Katherina Reiche’s reckless wrong-way drive continues unabated. Jan Philipp Albrecht reports in the Presidents’ Column.
Credits: picture: Sibylle Fendt / Collage: Heinrich-Böll-Stiftung, All rights reserved.
The situation is paradoxical. Climate-friendly mobility and heating systems and clean, emission-free industrial production have long been technically possible. Here in Germany, the manufacturers of these technologies have been in the starting gate for years. But one decisive factor is still hindering the switch: the price of electricity. In most cases, the transition to climate-neutral approaches – whether in transport, heating, or industry – means a shift from fossil-based energy sources to electricity (generated from renewable sources) and the energy carriers produced with it. However, due to high levies, charges, and taxes on the price of electricity, such a switch is often not cost-effective. This will have dramatic consequences, including for our energy efficiency and future security of supply.
The network charges are too high
The previous government – led by a coalition of social democrats, liberals, and Greens – noticeably reduced the price of electricity, for instance by abolishing the renewables (EEG) levy. However, electricity prices are still too steep for the switch from fossil fuels to electricity to be an attractive option, mainly due to high grid fees. This is where the next absurdity becomes apparent: while Germany’s gas networks are no longer being expanded and consumers are charged only minimal fees for a network that has already been paid for, we have to pay through the nose for our electricity usage. Every individual connection to a wind or solar plant incurs costs that are passed on to us electricity consumers, as does the increased need for grid expansion linked to the energy transition. Levies, charges, and taxes are therefore more than twice as high for electricity per kilowatt hour as for gas. This disadvantages those citizens and companies who are driving forward the expansion of our future energy supply, our mobility, and our industrial development and sends a fatal signal.
The energy transition will only succeed if there is broad participation across society, but this is exactly what is being blocked. Community energy projects that want to collectively build wind and solar power plants and use district heating or e-mobility; visionary industrial companies that are converting old refineries into hydrogen production facilities and aluminium smelters into gigantic energy storage facilities; start-ups that retrofit regular-service buses into EVs or offer highly efficient heat pumps, or even mobile electrolysers for domestic use – they all stumble over the hurdle of electricity prices. At the same time, old technologies that have no future and that will soon become a cost trap for us all continue to be built in and sold. To tackle this, the state must take on a greater share of grid fees. Such a move would require a completely different set of priorities for state subsidies in the energy sector.
Old technologies will soon become a cost trap
These distorted, politically motivated energy prices do not only hinder the energy transition – they also stand in the way of noticeable price relief for domestic energy users and are a major obstacle to the economic success of important future technologies that are “made in Germany”. While Germany spends over 60 billion euros annually on fossil fuels, its new federal government has broken its promise to abolish the comparatively low electricity tax and is instead financing costly election gifts that have no significant effect on prosperity, wellbeing, or security. Energy Minister Reiche’s announcements that billions more will be invested in three times as many new gas-fired power plants as planned under the previous government – to be funded by cuts in support for renewable energies – are a new escalation of the federal government’s wrong-way drive in the field of energy and economic policy. It’s time to send a clear signal: everything that protects and benefits us must be cheaper than what harms us.