German FIT surcharge could explode

According to a report in German economics daily Handelsblatt, the surcharge passed on to our consumers to cover the cost of feed-in tariffs in Germany could rise by nearly 50% this fall. The problem is that renewable power is increasingly lowering the price of electricity on power exchanges – and ironically, the lower that price goes, the more expensive renewables look.

Handelsblatt reports that insiders from grid operators estimate that the surcharge for renewable power would increase by nearly 50% from the current level of around 3.6 cents per kilowatt-hour to 5.2 cents this fall, when the rate is adjusted. No one wishes to confirm the estimate on the record, and politicians say there is no point in speculating before the surcharge undergoes its annual review.

The German surcharge is designed to reflect the extra cost of renewable power increase as renewables reduce the price of power on power exchanges. As our colleagues at Photon pointed out today in a press release in German (PDF), power is now no cheaper at 2 PM in the afternoon than it is at night, which essentially means that peak power prices are moving towards baseload prices. At the beginning of the week, Photon also said (PDF) it believes that pumped-storage dams in Germany are now running two cycles a day instead of one. It used to be customary for expensive power at night to be stored for daytime consumption, but now power is apparently being stored both at night for consumption in the morning and then once again in the afternoon for evening consumption.

The EPEX website also makes it easy to compare prices between France, Germany/Austria, and Switzerland. As the figures for today show, prices are only low in the afternoon in Germany/Austria, where they bottom out at just above 35 euros per megawatt-hour today. In France and Switzerland, the price comes in closer to 55 euros at 2 PM.

More: http://www.renewablesinternational.net/german-fit-surcharge-could-explode/150/537/38113/