Germany: EEG levy to be abolished as early as July 2022

Due to the sharp rise in energy prices, the German government has decided to abolish the EEG levy earlier than planned. It will now be abolished as early as July 1 of this year, rather than next year.

22 years of the EEG levy

Introduced in 2000, the EEG levy was designed to promote the expansion of renewable energies. Specifically, solar, wind, biomass and hydropower plants were subsidized with the money. The levy was paid directly by consumers through their electricity bills. From them, it ultimately flowed to the companies operating the transmission grids. Until October 2021, the EEG levy was 6.5 cents per kilowatt hour, since then it has been just 3.7 cents.

Consequences uncertain

The reduction in the levy was already intended to relieve the burden on consumers – but this has not been achieved. Instead of the hoped-for electricity price reduction, prices rather rose. Also in July is not to be counted inevitably on sinking prices. For this to happen, the companies offering electricity would have to decide to pass on the reduction to their customers – which is by no means a foregone conclusion. However, should they decide to take this step, electricity prices would have to fall by 10.7 percent.