Energy Experts: Costs Of Renewable Energies Rise To Critical Level

Costs for the Renewable Energy Sources Act (EEG) will rise significantly over the next few years. This will put public approval of subsidies for renewable energies in danger. This is the finding of the current ZEW-Energiemarktbarometer (Energy Market Barometer), a survey of the energy industry in Germany which is conducted by the Centre for European Economic Research (ZEW), Mannheim and comprises the expectations of more than 200 experts.

Despite cuts in funds for photovoltaics in summer of 2010, more than three fourths of the experts expect rising feed-in tariffs on household electricity within the next five years. The increase in EEG feed-in tariffs from about 2ct/kWh to 3.5ct/kWh by the beginning of 2011 is already considered in this figure. Around 45 percent of experts say EEG-contribution for household electricity will reach 4-6ct/kWh, while 27 percent even think that an increase to 6-8ct/kWh is possible. Only one fifth of all survey participants is of the opinion that EEG costs will be stable after the increase of January 2011.

The majority of experts are convinced that this cost level will endanger public acceptance of the funding of renewable energies. About 30 percent of experts think that a tariff of 4-6ct/kWh is the critical level, 24 percent set this level at 6-8ct/kWh. Fifteen percent of the survey participants are convinced that the acceptance threshold was already passed in January, at 3.5ct/kWh.

The energy experts thus confirm the assessment of a group of energy researchers who wrote a letter of warning to the German government last week, asking for a comprehensive reform of the EEG. The letter especially decried exploding costs for the subsidies for photovoltaics.

Nevertheless, the findings of the ZEW Energy Market Barometer also show that the majority of experts want to keep up technology-specific funding. Another majority would like to see funding for renewable energies aligned on a European level. These two groups are not congruent. Instead of the EEG, about 30 percent of experts would like to establish a European alignment of the funding of renewable. This should take place via emissions trading or uniform feed-in tariffs for all technologies.

For further information please contact

Prof. Dr. Andreas Löschel, Phone: +49 (0)621/1235-200, E-mail: loeschel@zew.de

The ZEW-Energiemarktbarometer (Energy Market Barometer)

The ZEW-Energiemarktbarometer (Energy Market Barometer) is an industry-specific indicator of economic sentiment based on a semi-annual survey of the energy supply, trade, and services industries, as well as regional suppliers in Germany. It comprises the expectations of more than 200 experts concerning short and long-term developments in the national and international energy markets. The results of the current ZEW Energiemarktbarometer (survey period November 2010) will be published in the ZEWnews 01/02-2011 (German language only).