Won’t the Energiewende be too expensive for the German public?

No: one goal of the Energiewende is to keep energy affordable in the future. It will also create jobs and boost the country’s economic strength. Its two pillars, energy efficiency and the development of renewable energies, are aimed at reducing dependence on energy imports, increasing security of supply and facilitating profitable investments in Germany. The Energiewende will pay for itself.

The price of crude oil rose sharply during the past decade. One effect is that consumers spent around 7.5 percent of their total household expenditure on energy in 2016, compared with less than six percent in the late 1990s. Heating, hot water, cooking and fuel on the basis of imported fossil energy sources account for the largest share of German households’ energy bills. Although oil prices fell at the end of 2014, giving German consumers a welcome respite, they have been rising again from 2018 and remain unpredictable. The price and availability of fossil fuels continue to depend on supplier interests.

It is true that the Energiewende also has knock-on costs. Billions of euros have to be invested in order to set up a new energy infrastructure and carry out energy-efficiency measures. This means that the development of renewable energies was a factor in the increase in the average electricity prices paid by households in Germany in recent years. On average, consumers paid 21 eurocents per kilowatt-hour in 2007. They now pay around 29 eurocents. With every kilowatt-hour of electricity, consumers are sharing the costs of the development of renewable energies via the Renewable Energy Sources Act surcharge. In 2019, this surcharge is 6.4 eurocents. However, the amount actually paid by the public ultimately depends on the interplay between various price factors. For example, the electricity exchange price has declined sharply due to the increasing amounts of power from renewable energies that is sold on the exchange. Taken together, both price elements – the Renewable Energy Sources Act surcharge and the electricity exchange price – have been decreasing for four years. As a result, the average electricity costs for households have remained stable during the same period. The shift to an auction system will bring down the cost of promoting renewables and save households even more money.
It is also important to consumers that the German economy is not overburdened. High energy costs have a knock-on effect on product prices and companies’ competitiveness. This is why Germany has exempted some particularly energy-intensive companies from the Renewable Energy Sources Act surcharge. However, companies that have been granted an exemption also have to invest more in energy efficiency.