April 8, 2014 / 7:11 AM / in 4 years

Exclusive: Germany, EU clinch deal on renewable surcharge rebate

BERLIN (Reuters) - Germany and the European Commission have reached an agreement on exemptions to renewable energy surcharges that benefit some German industrial companies, government and industry sources told Reuters on Tuesday.

The sources said final details of the agreement - reached after months of wrangling in Berlin and Brussels - still had to be worked out, but that Germany had allayed EU concerns that its renewable energy law contradicted the bloc’s rules on industry rebates.

Under the agreement, a cap of 4 percent of gross value added (GVA) for the renewable energy surcharge will be set on industrial energy users. The Commission had wanted 5 percent.

The cap for heavy industry users will be 2.5 percent of GVA, the sources told Reuters.

The European Commission was looking into whether such discounts on surcharges were giving Germany’s industry an unfair advantage over rival companies in other EU countries.

The dispute has unsettled energy-intensive industries in Europe’s largest economy who have warned that they may have to move investment and even production abroad if the cost of power is so high it makes them uncompetitive.

The discounts are worth some 5.1 billion euros a year. They are designed to help Germany’s transition to renewable energy.

The agreement was reached in late night negotiations between senior German government and EU officials, the sources said.

Under the deal, the German government also has scope to set special rules for individual sectors.

For that reason, Chancellor Angela Merkel’s cabinet will not pass any measure on industry rebates on Tuesday when it endorses a broad reform to the renewable energy law that is designed to slow the increases in electricity prices in Germany as it moves to nearly double its green power share to 45 percent by 2025.

The European Commission is expected to set its new support guidelines on Wednesday.

The agreement reached between Berlin and Brussels goes beyond previous compromise deals for especially heavy users of electricity.

The 65 sectors selected will have to pay 20 percent of the surcharge for green energy, but only up to a maximum of 4 percent of GVA - the total value of produced goods with costs subtracted.

Some of the most energy intensive sectors, such as aluminum or copper, will have the lower cap of 2.5 percent of GVA.

The government negotiated more room for maneuver for individual sectors where there could be a cap of 1 percent. Details are still to be finalized.

Ordinary consumers have to pay the surcharge and some of them lobbied Brussels for heavy industry to pay more.

Germany’s renewable energy law guarantees above-market payments to green power producers. Partly because of that system, German retail customers’ bills have never been higher, with only Danish consumers paying more in Europe.

Germany’s 40 million households have seen their bills go up by 60 percent in the past 10 years to an average of 1,136 euros per annum, according to data from Internet portal Verivox.

The surcharge levied for green power, among other taxes and fees, amounts to 250 euros of that total and has risen more than ten-fold since 2004.

Reporting Markus Wacket; Writing by Erik Kirschbaum and Madeline Chambers; Editing by Noah Barkin

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