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Katherina Reiche: Electricity prices to fall significantly only in the 2030s

Germany's Economy Minister Katherina Reiche (CDU) expects consumers and industry to benefit from significantly lower electricity prices only in the 2030s. She told the dpa news agency that noticeable relief would not come before then.

Katherina Reiche: Electricity prices to fall significantly only in the 2030s
Photo: cdn.prod.www.spiegel.de

Germany's Economy Minister Katherina Reiche (CDU) expects consumers and industry to benefit from significantly lower electricity prices only in the 2030s. She told the dpa news agency that noticeable relief would not come before then.

In an interview with the dpa news agency, she said: "We will only see noticeable relief in the 2030s."

Reiche rejected criticism that her reform plans were slowing down the energy transition. “The energy transition will only be successful in the long term if climate protection, security of supply, affordability for citizens, maintaining competitiveness and a responsible use of taxpayers’ money come together.”

The cabinet has launched a reform of the Renewable Energy Sources Act (EEG) and a grid package. Reiche said the energy transition should become more cost-efficient because rising energy prices are burdening Germany as a business location.

There are also burdens on the federal budget. “Today the federal government spends 17 billion euros on EEG funding. The trend is rising,” said Reiche. Without reforms, the burden on the federal budget would continue to grow. “We are still bearing the consequences of support decisions made long ago. In my view, the most expensive EEG amendment was the one from 2014. Its funding commitments have an impact for over 20 years – we are still carrying this burden today.” That is exactly why the EEG is now being restructured. “My goal is more market and less permanent support.”

For example, it is planned that from 2027 new solar systems with an installed capacity of under 25 kilowatts, especially small rooftop photovoltaic systems, will no longer receive permanent support.

“Until now, a principle has applied to renewables that exists in no other market: even electricity that is produced but cannot be used due to grid bottlenecks is remunerated,” said the minister. “So for curtailed electricity, the same remuneration is paid as for electricity that is actually used. We are now moving away from this principle step by step.” The problem: old systems continue to enjoy grandfathering for the agreed 20 years of support.

Grid fees, as a major cost component, have developed in recent years into one of the biggest drivers of electricity prices, said Reiche. “Why? Because the expansion of renewable energies and the legal entitlement to a grid connection – regardless of where systems are built – have often required grid expansion that could not be realized in a timely manner.”

That is inefficient and leads to significant additional costs for electricity consumers, said the minister. “In the future, we will steer the expansion, especially of wind energy but also of ground-mounted photovoltaics, more toward areas where grid capacities already exist or where the grid can absorb the additional electricity.”

One important lever is the gas price, said the minister. “The cheaper our gas importers can buy gas, the lower the costs of the s

Source: www.spiegel.de