Germany drops renewables surcharge, household bills to fall by €300

German consumers will no longer have to pay the renewables surcharge on the power price as of July 1, 2022.

The German federal parliament (Bundestag) passed legislation to abolish the renewable levy that households and businesses pay with their power bills, and which was instrumental to fund the country’s expansion of renewable power capacity in the past 20 years.

An average German family will save around 300 euros ($A450) per year as a consequence. Payments to renewable installations will instead be paid for from the state’s energy and climate fund, which also receives revenue from emissions trading.

To ensure that consumers really benefit from the price relief, the law obliges electricity suppliers to transparently lower prices as of July, the federal economy and climate ministry said.

The three-party government announced in its 2021 coalition agreement that the renewables levy, which currently amounts to 3.7 cents per kilowatt-hour, was going to be abolished by the end of 2022.

The idea was to reduce the costs for power so that electric transport (e-cars) and heating (heat pumps) would become cheaper than fossil-fuelled alternatives.

However, rising energy prices due to the shortage of Russian gas and the war in Ukraine prompted the government to introduce the measure earlier.