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Germany to slash renewable power fees to ease burden of higher energy bills

 Wind turbines on a field near Jacobsdorf, eastern Germany.
Wind turbines on a field near Jacobsdorf, eastern Germany.   -   Copyright  AFP
By Markus Wacket  with Reuters - UK Online Report Business News

Germany plans to ease the pressure on consumers from rising energy bills, by cutting the surcharge which helps fund renewable energy in the country.

This will be reduced by 43 per cent next year, industry and government sources told Reuters on Thursday.

The renewable power support surcharge paid to producers is a major contributor to consumers' electricity bills. It will be cut to around 3.7 euro cents per kilowatt hour (kWh) in 2022 from 6.5 cents in 2021.

Sources added that the government will make up for the loss with a contribution of €3.25 billion.

The move is published officially today as policymakers try to limit the burden of soaring wholesale power prices. Energy prices are rising globally because of increased demand as economies begin recovering from coronavirus restrictions and due to reduced supply and transport and storage issues.

The switch to using cleaner, greener sources of power is important as it will reduce the amount of harmful greenhouse gas emissions from fossil fuels and cut down on air pollution. Renewable energy also enhances economic development by developing jobs in manufacturing and installation.

How much are energy bills in Germany?

Germany has the highest power prices in Europe, partly because of past subsidy schemes, but it has been phasing them out in favour of supporting new green power investments.

The renewable surcharge, called the EEG, was introduced to help with the cost of transitioning to wind and solar power and is collected by transmission grid operators. It currently makes up a fifth of customer bills.

A typical German household has seen bills rise by 9.3 per cent over the past 12 months to a record €1,255 for 12 months in October, according to prices portal Verivox.

In 2020 the surcharge cost consumers €24 billion. The EEG was reduced by 3.9 per cent in 2021 to help lift the economy out of its COVID 19 slump.