Frankfurt, Germany—The German government will drastically lower a levy on electricity consumption from 2022 to help ease the burden on consumers as Europe battles soaring energy prices, grid operators announced Friday.
The Renewable Energy Act (EEG) surcharge, used to fund the expansion of solar and wind plants, will fall by more than 40 percent to 3.723 cents ($0.043) per kilowatt hour from January 1, according to a statement by 50Herz Transmission, Amprion, TenneT TSO and TransnetBW.
It is the largest reduction yet since the green levy was introduced in 2000 to help Europe’s top economy transition away from fossil fuels towards cleaner energy sources.
Economy Minister Peter Altmaier said recently that the EEG surcharge should be phased out completely over the next few years “to keep power affordable.”
The shortfall will be offset by higher government subsidies, partly thanks to a tax on carbon emissions introduced at the start of 2021.
Germans already have the highest electricity bills in the European Union and as winter approaches, pressure is growing for the government to help mitigate a looming energy price crisis.
Gas prices have surged in Europe in recent months as demand has soared with economies emerging from their COVID-induced restrictions. Stocks were also left low after a long, cold winter.
Wholesale natural gas prices, the lead indicator for overall energy prices in Europe, have more than tripled this year. Oil and coal prices have also jumped, fueling fears over spiking inflation and rocketing energy bills.
EU leaders will discuss the energy issue at a summit next week.
The European Commission has proposed that member states temporarily reduce taxes and levies to help lower energy bills for households and businesses.
In France, the government has pledged to block any further price increases for gas and electricity until April.
