Balance after a good 20 years: what the EEG surcharge has brought

The Bundestag is expected to seal the end of the EEG surcharge today. In the future, the state should promote wind and solar systems, not consumers. Was the model a success?

Rainer Baake is proud of his work: “We started a revolution,” he says. As State Secretary in the Green Ministry of the Environment under Jürgen Trittin, in 2000 he was one of the inventors of the Renewable Energy Sources Act, EEG for short – and with it the EEG levy.

The idea: Consumers pay a little more for electricity per kilowatt hour and the state uses this money to promote the expansion of wind and solar systems. In the beginning, says Baake, new technologies are very expensive, “because there are only a small number, because the economy has not yet learned how to optimize processes.” That’s why you have to support this process at the beginning.

And so, thanks to the EEG levy, the operators of the systems were guaranteed that their electricity would be purchased – at a secure price. A kickstart for wind and solar in Germany, which was initially expanded much faster than even Baake and the red-green government had expected. The model was then copied in many other countries. “The EEG and the promotion of renewables and the reduction in prices for these technologies is perhaps the greatest achievement that Germany has ever made in global climate protection,” says Baake.

Mistakes have been made

For consumers, on the other hand, the EEG surcharge has been a price driver for years. Thorsten Lenck from the think tank Agora Energiewende believes that the state did not react in time to the boom in renewables. “You could see that the costs for renewable energies fell relatively quickly. But the subsidy rates were still comparatively high. And that brought a lot of income into the coffers of the renewable energy plant operators.”

Rainer Baake also sees this as the biggest mistake: Politicians have set the level of funding for too long, funding too much. As a result, the prices for the energy transition were unnecessarily high at times. In 2009 and 2010, for example, “far too much” was paid for solar energy. “In the end, this led to laziness and also to the fact that the solar industry was no longer competitive and left the country,” says Baake. He attributes the failures primarily to the Union-led governments of the 2000s, to which he no longer belonged.

Technology becomes competitive

In 2014, Environment Minister Sigmar Gabriel from the SPD brought Green Baake back into the ministry. Two years later, Gabriel announced a system change: The renewables should be “fit for the market”. Since then, the allocation of new areas has been carried out via a tendering process. Potential operators of wind and solar systems compete and whoever wants the least funding gets the contract for an area. A good number of projects now do without any funding at all because the technology has become competitive.

It should be further promoted

Nevertheless, the government wants to retain the possibility of funding. After all, the expansion of renewables should be much faster in the next few years. From now on, the state should pay for the subsidy and no longer consumers with a levy on the electricity price. Baake predicts that government spending will decrease in the future. “It’s going to zero now.”

Thorsten Lenck from Agora Energiewende restricts that. He also believes that state funding will decrease significantly in the long term. But “at the moment there is no competition”. If only a few operators of wind and solar power plants are competing with each other for new areas, “then the tender will not help me to reduce costs. Then all bidders in this auction will bet on the maximum subsidy.”