Solar boom drives up German power price

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BERLIN, Oct. 5 (UPI) -- The ongoing solar energy boom in Germany is pushing up power prices, an energy industry group claims.

Prices for electricity rose by 2.1 percent in Germany during the first half of this year, the German Association of the Energy and Water Industries, or BDEW, said Monday.

The energy industry lobby group credited mainly the billions of dollars in levies paid by German taxpayers for roof-mounted solar panels as responsible for the hike.

"Taxes and levies have climbed to a record high and now make up 41 percent of people's electricity bills," BDEW Director Hildegard Mueller said in a statement.

The German government through the Renewable Energy Law, or EEG, regulates the feed-in-tariff aimed at boosting power production from renewable energy sources. Paid by German taxpayers via their electricity bill and guaranteed for 20 years, the levies vary from 21 cents per kilowatt-hour for offshore wind turbines to 46 cents per kw/h for roof-mounted solar panels.

Tariffs paid for wind, solar and hydro power will rise to $11.3 billion by the end of this year, up from $7.3 billion in 2009, the BDEW warned. Together with subsidies for the modernization of Germany's aging energy grid, the total bill of taxes and levies this year will rise to $23.4 billion -- a seven-fold increase since 1998, the group claims.

The German boom of solar panel installations has outgrown even the most optimistic expectations. Experts forecast up to 8 gigawatts of installations this year, that's equivalent to four large nuclear power plants.

Well aware that the industry is maturing more quickly than anticipated, Berlin this year agreed to reduce subsidies for rooftop panels by 16 percent. The decision helped the German industry to a first-half sales boom, as private customers ordered panels in droves to beat feed-in-tariff reductions set for this summer.

The German consumer association VZBV claims that the panels installed in 2010 will result in additional costs of $36 billion during the next 20 years.

The renewable energy industry says investments into clean energy sources make sense, reminding utilities that nuclear power and lignite have been subsidized with several dozen billions of dollars since the 1950s.

Green politicians in Germany argue the less-than-perfect competition on the German power market -- still dominated by the four main utilities Eon, RWE, Vattenfall Europe and EnBW -- is to blame for the price hike.

"Electricity wholesale prices have dropped by 30 percent to 40 percent since 2008, and that's not relayed to consumers," Baerbel Hoehn, a senior Green Party official, told German news magazine Stern.