Green energy to hit Germans' bills: Vattenfall

FRANKFURT Mon Aug 27, 2012 10:32am EDT

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FRANKFURT (Reuters) - Germany's energy strategy will cost consumers dearly as costs for new renewable power generation units and networks must be passed on, the head of the German unit of Swedish state-owned energy group Vattenfall was quoted saying on Monday.

The comment came a day before Chancellor Angela Merkel is to meet with industry, unions and social causes lobbyists on run-away power prices, which already need reining in much more immediately.

"In the next 10 years some investments totaling 150 billion euros ($187.8 billion) will be necessary," Vattenfall Europe chief Tuomo Hatakka told the Sueddeutsche Zeitung. "I assume that the bill for private customers will rise by up to 30 percent to 2020."

He also said the planned shift away from nuclear and fossil fuels towards green energy derived from wind and solar would take longer than expected, citing delays to important projects such as connections to offshore wind parks.

German consumers must pay rising subsidies for renewables which are paid above market rates under the law.

Germany already has the second-highest power prices in Europe. Consumers and industry alike fear the system shift will cost them ever more, discouraging spending and impairing competitiveness.

Consumer groups plan to remind Merkel of a pledge last year to keep the 2012 charge to consumers arising from the green energy law (EEG) of 3.6 cents a kilowatt hour stable in coming years.

Experts predict that given the expansion of solar panels and wind turbines in the meantime, the fee will go up to more than 5 cents in 2013.

Power transmission firms are due in October to present a firm calculation of 2013 surcharges from production forecasts.

The hike to above 5 cents will work out as an additional 70 euros to a 900 euros average household power bill in 2012, of which currently already 150 euros go towards green power.

POLITICAL IN-FIGHTING

Parties in and outside the government are jostling for positions ahead of general elections in a year's time, and views differ within the ruling coalition cabinet.

Liberal Economy Minister Philipp Roesler said: "We need not just a reduction of subsidies but an entirely different system."

Within the same cabinet Conservative Environment Minister Peter Altmaier is steering a different course by seeking to reward the renewable industries, which produce carbon-free and create jobs, while containing the worst financial hardships for users.

Exemptions for big power consumers mean the private customer must pick up an even higher bill than would be the case if everyone shared the cost.

The 500 top power users representing a fifth of consumption are exempt from renewable payments aimed a keeping them competitive. Big consumers may also apply for certain exemptions from network usage fees.

Fast-rising renewable subsidies are at odds with falling generation costs in the wholesale market, due to weak demand amid the poor economic climate and from increased capacity.

German power for 2013 delivery currently costs around 50 euros a megawatt hour, not far off its lows in late 2010.

Utilities say they cannot yet pass on the price falls as they typically sell ahead their production years in advance.

They also blame the state for high prices as some 45 percent of the power bills are made up of state taxes and fees.

($1 = 0.7989 euros)

(Additional reporting by Markus Wacket; Editing by William Hardy)

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