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What consequences the installation of new renewable capacities will have on the EEG surcharge can be calculated using the EEG calculator by Agora. Even in the case of a mid-level installation of new renewable capacities, i.e. in a more optimistic scenario than presumed in the EEG, only 15.8% of today‘s primary energy consumption would be covered from renewable energy sources in 2030, which is an increase of just under 3 percentage points compared to 2017. The installation of new renewable capacities would thus have to be much more promoted to make it possible to cover demand in a few years from now. How the situation could look like, what consequences such an intensified installation of new capacities would have on the EEG surcharge and where EEG 17 will take us in 12 years – all this is addressed in the article below.
What impact will the targets set in the EEG or an intensified installation of new renewable energy (RE) capacities have on the EEG surcharge? And how will the EEG surcharge and the electricity price develop over the years? This and other questions can be answered based on the EEG calculator developed and published by think-tank „Agora Energiewende“ (further: Agora).
Simply speaking, as is generally known, the EEG surcharge arises from the difference between the fixed tariffs paid to power plant operators and the average market price quoted at a given time at the energy exchange. The development of the EEG surcharge is thus dependent on diverse factors which influence the price quoted at the energy exchange. Such factors naturally include e.g. the phasing-out of nuclear power, the fossil fuel phase-out plan, exports, etc. The price is however particularly influenced by the installation of new capacities in diverse renewable energy sectors.
As for the calculator: by selecting the weight of various influencing factors, you can generate a simulation and a graphic representation of diverse indicators, e.g. the EEG surcharge, generation capacities and electricity volumes over a period from 2010 to 2035. Our calculations are based on nominal (i.e. not inflation-adjusted) values – you can select this type of value in the EEG calculator settings. The values stated in the text are net values.
Below, we present three scenarios calculated using the EEG calculator:
First of all, we would like to model a scenario where the EEG 2017 targets are presented. In the previous year, the share of renewable energy in electricity consumption was approx. 36%. According to the federal government, this share should increase to 65% by 2030. This should be achieved, among other things, based on the objective of decreasing electricity consumption, which is highly questionable.
To present the possible development of the EEG surcharge and the electricity volume based on the targets formulated in the EEG, a reference value is provided by Agora. For example, the calculator takes into account the fact that due to the auction model, the level of completion of onshore wind power projects will be only 90%. Thus, with initially higher values for this technology, it is assumed that the average annual rate of addition of installed capacity will be 2.61 GW in the long term. In the case of offshore wind power, values of between 0.8 and 0.9 GW are assumed; in the case of photovoltaics it is 2.5 GW, and in the case of biomass it is 0.2 GW. Thus, by 2030, an electricity volume of approx. 280 TWh/a could be generated from renewable energy sources.
Chart 1
Chart 2
The Agora calculator was primarily designed to calculate the development of the EEG surcharge over time. The relevant diagram shows the electricity price (the price quoted at the energy exchange) and die EEG surcharge applicable in the respective year. In this way, the interdependence of both values relative to the rate of installation of new renewable capacities is illustrated. In the case of the said reference values, the EEG surcharge – after a slight increase to maximally 7.96 ct/kWh in 2021– would significantly fall in the long term. In 2030 already, the EEG surcharge would be just 5.35 ct/kWh. By comparison, the 2018 EEG surcharge is currently at 6.79 ct/kWh.
The second scenario illustrates the development of the values amid a very high rate of installation of new capacities.
If you set all input parameters concerning the installation of new capacities for the above-mentioned technologies to the maximum rates allowed by the Agora calculator, the annual figure for the installation of new capacities will be 6 GW for onshore wind, 2 GW for offshore wind, 6 GW for photovoltaics and 0.4 GW for biomass. Thus, by 2030, an electricity volume of nearly 500 TWh/a could be generated from renewable energy sources (see chart 3).
Chart 3
Chart 4
Such a volume of generated electricity would make it possible to cover nearly all of today‘s demand for electricity of approx. 520 TWh/a (see chart 4). Because the targets set in the EEG envisage even a declining rate of electricity consumption in the long term, electricity consumption could be thus entirely covered from renewable energy in 2030, according to these values.
It is, nonetheless, questionable, whether it will be indeed possible to lower electricity consumption to such an extent over the years. Due to the electrification of most diverse areas, a claim that demand for electricity will strongly increase could also be justified. Especially the reorientation of the automotive sector towards electro mobility could lead to a rapid increase in demand for electricity. Volker Quaschning has developed a relevant model which illustrates the possible level of future demand for electricity. He expects that electricity consumption will be increasing linearly and will cross the threshold of 1000 TWh already in 2030 (see chart 5).
Chart 5
Presumably, as regards demand for electricity, neither the targets set by the federal government nor Quaschning‘s extreme-case scenario will come true. A possibly realistic scenario in this regard is presented in scenario 3 further in this article.
In the case of the very high level of installation of new renewable capacities described above and presented in the Agora calculator, the EEG surcharge would reach its peak value of 9.03 ct/kWh in 2024 (see chart 6), which is only approx. 2.2 Cent higher than today‘s EEG surcharge.
Chart 6
Also in this scenario, it can be seen again that the EEG surcharge will decrease in the long term. In 2030, it would be only 7.57 ct/kWh. It should be also mentioned at this point that opportunities for broader refinancing (reduction of privileges for energy-intensive industries, cross-subsidisation based on CO2 tax, etc.) have not been taken into account, although these would significantly lower the EEG surcharge.
The EEG calculator makes it possible to present not only extreme-case values. The author believes that it is possible to illustrate a realistically possible development if, for example, the middle scenario is selected, i.e. where values are slightly higher than the reference values in the first scenario. If the annual installed capacity were 3 GW for onshore wind power, 1 GW for offshore wind power, 3 GW for photovoltaics and 0.2 GW for biomass, this would make it possible to generate an electricity volume of over 300 TWh from renewable energy sources in 2030 (see chart 7).
Chart 7
Also here, Agora‘s EEG calculator illustrates the development of the EEG surcharge in form of a diagram. As regards the rates of the EEG surcharge, the difference compared to the first scenario is naturally relatively small due to the small difference in the levels of the installation of new capacities. In this case, the EEG surcharge would reach its peak level in 2021 at 8.03 ct/kWh, which is only slightly higher than the level in the reference scenario (see chart 8). Also here it can be stated that the EEG surcharge will strongly decrease over time. In 2030, it would be only 5.65 ct/kWh.
As can be seen from the electricity price/ the surcharge charts, the EEG calculator assumes that electricity prices will be increasing nearly linearly in the future. Agora assumes here that the increasing prices of CO2 and raw materials will more than offset the electricity-price-decreasing effect of the increasing share of renewables. This increase of approx. 3.65% p.a. always involves a decreasing EEG surcharge in the long term. Irrespective of whether the price is driven by a higher share of the EEG surcharge due to a lower electricity price or involves a (in %) lower electricity price and thus a higher EEG surcharge, calculations lead to the same result in the end.
Similarly interesting is the share of renewables in total primary energy consumption. Currently (as of 2017), renewables have a share of a good 13%. But what would be their share in 2030 if the developments presented in the third scenario materialised? If the level of electricity generated from renewable energy sources was 210 TWh in 2017 and 310 TWh in 2030, it would be possible to cover in 2030 only 15.8 % of today‘s primary energy consumption using renewable energy sources. This is despite the fact that the federal government set the goal of strongly reducing primary energy consumption from the current 13,383 petajoules in 2017 to 7.190 petajoules in 2050. It is, however, extremely doubtful whether measures will be initiated to enable such a strong reduction in primary energy consumption (energy transition).
Chart 8
Kai Imolauer
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