Under the Special Equalisation Scheme, companies with high electricity costs receive a reduction on their renewable energy surcharge. The exemption applies only to companies with intensive electricity costs in sectors that compete internationally. It is vital that the competitiveness of industries with intensive electricity costs - which pay high electricity rates in comparison to their international competition - and the jobs provided by these industries not be jeopardised.
The Special Equalisation Scheme works as follows: beneficiaries pay the full for the first gigawatt hour. For all the electricity they use beyond this amount, they must pay 15% of the surcharge. However, this burden on companies is limited to 4% of the company’s gross value added, or, for companies whose electricity-cost intensity is 20% or more, to a maximum of 0.5% of the company’s gross value added (known as the “cap” / “super-cap” in the EU’s Guidelines on state aid for environmental protection and energy).
The 2017 revision of the Renewable Energy Sources Act reduced the thresholds for the electricity-intensive and trade-intensive sectors contained in List 1 of Annex 4. Under these rules, a lower level of intensive electricity costs suffices for a company to obtain a reduction in the EEG surcharge. In return for this, the level of the EEG surcharge to be paid by companies with an electricity cost intensity of between 14 and 20% is limited not to 15, but to 20% of the full EEG surcharge.
More detailed information on the Special Equalisation Scheme can be found in the . For a list of companies and divisions of companies that were beneficiaries of the Special Equalisation Scheme in 2018, please consult the . The list can be found (in German) here (OLSX: 718KB).
Since 2016, levels of electricity intensity, which are used to determine whether a firm is eligible to benefit from the Special Equalisation Scheme, have been calculated based upon average electricity prices rather than company’s actual electricity bills. The exact way in which this is to be done is set out in the Average Electricity Price Ordinance.
Furthermore, there is an looking at how and to what extent existing benchmarks and other efficiency requirements can be used in the process of calculating levels of electricity intensity in the context of the Special Equalisation Scheme. This expert report was commissioned by the Federal Ministry for Economic Affairs and Energy and written by Prognos AG.
Average Electricity Price Ordinance
The European Commission has approved the Special Equalisation Scheme under EU state-aid rules and the Guidelines on state aid for environmental protection and energy, subject to levels of electricity intensity, which are used to determine whether a firm is eligible to benefit from the Special Equalisation Scheme, and which are now calculated on the basis of average electricity prices.
In its approval of the Special Equalisation Scheme, the European Commission provided for a transition period of two years for the switch to average electricity prices. The transitional period has expired. The Average Electricity Price Ordinance now implements the necessary changes and puts in place a more objective and transparent method for calculating levels of electricity intensity. Any effects on the EEG surcharge itself are marginal.
On 17 February 2016, the Cabinet took note of the Average Electricity Price Ordinance (in German). The Ordinance entered into force on 24 February 2016. On 29 February 2016, the Federal Office for Economic Affairs and Export Control published this year’s list of average electricity prices, which you can find . This will provide clarity for the companies affected as to what average electricity prices will be taken as a basis for determining their electricity-cost intensity – before this year’s application process starts.
Self-supply and the Renewable Energy Sources Act
In order to lower the costs for the further expansion of renewable energy, the new Renewable Energy Sources Act focuses on less expensive technologies. Since the adoption of the 2014 Renewable Energy Sources Act, overfunding is being eliminated, bonuses dismantled and assistance reduced in stages. In addition, the has introduced a paradigm shift: rather than being fixed by the government, rates of renewables funding have been determined by the market by means of dedicated auction schemes since 2017.
The transformation of our energy supply is a task for society as a whole, which is why not only industry but also private electricity customers are to bear a reasonable share of the costs under the Renewable Energy Sources Act. As a result, exemptions from the EEG surcharge are possible only when they are actually necessary. This way, the burdens arising from the energy transition are spread over more shoulders, following the principle of solidarity.
Since the entry into force of the 2014 Renewable Energy Sources Act, companies which produce conventional electricity to supply their own needs (self-suppliers) have been required to bear a share of the costs for the expansion of renewable energy. This has only applied to new installations. The 2014 Renewable Energy Sources Act has not changed the situation for existing installations.
The , which was adopted by the cabinet on , upholds this grandfathering arrangement: existing self-supply installations remain fully exempt from the EEG surcharge. Only following a substantial modernisation are they subject to a reduced EEG surcharge of normally 20%. These volumes of electricity which are subject to the (reduced) surcharge are included in the Special Equalisation Scheme. As a consequence, companies meeting the relevant criteria pay an EEG surcharge of at most 15%.
The rules established in the 2014 Renewable Energy Sources Act continue to apply to self-suppliers who use new renewable energy installations or new, highly-efficient heat-power cogeneration systems. They have to pay only a reduced EEG surcharge for these installations. In order to progressively introduce the new provisions for renewable energy installations and highly efficient heat-power cogeneration systems, the reduced surcharge rate was 30% through 2015 and was then raised to 35% for 2016. These reduced rates applied only during those two years. Installations that were put into service during this time and all renewable energy installations and highly efficient heat-power cogeneration systems that are put into service at a later date have had to pay a reduced EEG surcharge of 40% since 2017. The draft of an Act Amending the Combined Heat and Power Act and the Rules on Self-supply does not alter this situation.