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German Chancellor Angela Merkel pauses during a news conference with Swiss President Didier Burkhalter in Berlin Feb. 18, 2014. (REUTERS/Thomas Peter) German Chancellor Angela Merkel pauses during a news conference with Swiss President Didier Burkhalter in Berlin Feb. 18, 2014. (REUTERS/Thomas Peter)  

Green energy nightmare: Five million German households hit with higher energy bills

The green-energy revolution is in full swing in Germany. This may ostensibly be good for the planet, but it’s bad for Germans’ wallets.

Some five million households across Germany are set to be hit with higher electricity bills after the government raised taxes to support green energy.

“Several utility companies promised stable prices at the turn of the year, but now they are making up for it,” the energy-price tracker Verivox said in a statement. “The result for a typical household will be additional annual costs of 44 euros [$60.5] a year. Some 5 million households are affected [over the three months].”

Reuters reports that the tax used to support green energy production rose 18 percent in January, and has forced 80 German power companies to raise retail electricity rates for February, March and April by an average of four percent.

The German central and state governments make consumers pay taxes and fees on their energy bills to subsidize green-energy production from sources like solar and wind. Chancellor Angela Merkel’s government has made some effort to rein in the green taxes.

Reuters notes that “some 379 [power] suppliers already hiked prices by 3.5 percent, affecting 10 million households, while 11 companies cut prices by an average 2.6 percent.” Some argue that utilities are using the higher green charges to mask the fall in wholesale power prices, which means no savings are being passed on to consumers.

The 15 percent drop in wholesale power prices throughout 2013, however, was partly due to the increased use of coal-fired power. Germany has rapidly turned back to burning coal for electricity as carbon prices bottomed out last year and after the country shuttered some of its nuclear power capacity.

Bloomberg reports that eight hard-coal plants are set to go online in the next two years, which will help continue to bring down power costs throughout the decade. The country is ready to expand its generating capacity by more than 9.4 gigawatts, with 5.1 gigawatts coming from green energy and the rest coming from coal power.

“Prices will continue to fall as we still have an oversupply,” Frank Woskowski, a power trader at the utility AVU AG fuer Versorgungsunternehmen, told Bloomberg. “We are adding solar and wind power while more coal plants also go online.”

The problem is that while wholesale power prices may be driven down, green energy taxes may keep rising — offsetting falling wholesale prices. Taxes on green energy have quintupled since 2009 and cost consumers $26 billion in 2013 alone.

“The promotion of green electricity costs will cost our citizens [$32.5 billion] next year, which is a lot of money that could otherwise be spent on buying new cars, furniture or on restaurant visits,” said Michael Fuchs, deputy leader of the Christian Democratic Union in 2013.

Power prices have risen so much in the country that one of the leading newspapers has called electricity a “luxury good”.

“German consumers already pay the highest electricity prices in Europe,” reports Der Spiegel. ”But because the government is failing to get the costs of its new energy policy under control, rising prices are already on the horizon. Electricity is becoming a luxury good in Germany.”

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