NCPA - National Center for Policy Analysis

How Electricity Became a Luxury Good in Germany

September 20, 2013

Germany's aggressive and reckless expansion of wind and solar power has come with a hefty price tag for consumers, and the costs often fall disproportionately on the poor. Government advisers are calling for a completely new start, says Der Spiegel.

  • The German Environment Minister, Peter Altmaier, and others are on a mission to help people save money on their electricity bills, because they're about to receive some bad news.
  • The government predicts that the renewable energy surcharge added to every consumer's electricity bill will increase from 5.3 cents today to between 6.2 and 6.5 cents per kilowatt hour -- a 20 percent price hike.

German consumers already pay the highest electricity prices in Europe. But because the government is failing to get the costs of its new energy policy under control, rising prices are already on the horizon. Electricity is becoming a luxury good in Germany, and one of the country's most important future-oriented projects is acutely at risk.

  • This year, German consumers will be forced to pay 20 billion euro ($26 billion) for electricity from solar, wind and biogas plants -- electricity with a market price of just over 3 billion euro.
  • Two-thirds of the price increase is due to new government fees, surcharges and taxes.
  • But despite those price hikes, government pensions and social welfare payments have not been adjusted.
  • As a result, every new fee becomes a threat to low-income consumers.

It is clear that the next German government will have to plan a shift in energy policy. But the price of electricity is a toxic issue in the campaign, given the bad prognoses and broken promises.

Source: "Germany's Energy Poverty: How Electricity Became a Luxury Good," Der Spiegel, September 4, 2013.


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