Bundesnetzagentur publishes draft determination on the fair distribution of network costs incurred by the integration of renewable energies
Klaus Müller: "We want to significantly reduce the burden on regions with a high level of renewable energy"
Year of issue 2024
Date of issue 2024.05.15
The Bundesnetzagentur has today published a draft determination on distributing the additional costs incurred in distribution networks with a particularly high level of renewable generation. This second consultation is in preparation for a final decision, which the Bundesnetzagentur plans to issue by way of a determination in the third quarter of 2024. This distribution of additional costs is intended to take effect as from 1 January 2025.
"We want fair network tariffs for people and businesses in regions with strong growth in renewables. The energy transition is a collaborative task. Everyone benefits from investments in networks. Our aim is to have the costs distributed more fairly,"
said Klaus Müller, Bundesnetzagentur President.
Multi-step model
The Bundesnetzagentur still intends to reduce the burden on network operators faced with particularly high costs from the expansion in renewable energy and distribute the costs more fairly among all electricity consumers.
In December 2023 the Bundesnetzagentur issued a key elements paper in which it presented the model. During the first consultation, 102 responses to the key elements paper were received. The Bundesnetzagentur has evaluated all the comments and taken these as the basis for developing the model further. The result has now been published as the draft determination. The comments have been published at www.bundesnetzagentur.de/BK8-24-001-A.
The Bundesnetzagentur continues to propose a multi-step model. The first step would be to determine whether a network operator has a particularly high burden of costs from renewable energy expansion. To this end the Bundesnetzagentur has specified an indicator, which shows the amount of renewable generation capacity connected to an operator's network in relation to the consumption in the network area. What is new in this context compared with the key elements paper is that the model now also takes into account renewable generation capacity of third-party downstream network operators. Specifically, the reverse feed-in from downstream networks of third-party network operators will also be included in determining the indicator. This increases the individual indicators.
If the indicator for a network operator is higher than the threshold to be set at 2, the second step would be to determine the additional costs, which would then be distributed among consumers across Germany. As a further change in comparison with the key elements paper, the Bundesnetzagentur has now included a correction factor of 10% to cover any other factors possibly remaining. Thus 90% of the additional costs determined can be passed on. The network tariffs in the regions concerned would decrease. At present, 26 network operators under the Bundesnetzagentur's responsibility would be entitled to pass on their additional costs. These network operators' network tariffs would decrease by up to 39% and would then be mostly below and in only a few cases above the national average. The average household (with an electricity consumption of 3,500 kilowatt hours per year) in these regions would save up to €200 a year.
The third step would be to compensate the network operators for their additional costs. The costs incurred could be distributed equally across the country among all electricity consumers.
The Bundesnetzagentur specifically intends to use the mechanism under section 19 of the Electricity Network Tariffs Ordinance (StromNEV). This is already balancing out certain network costs over all network users. The section 19 surcharge makes up part of the electricity price. The aim of the surcharge at present is to offset any revenue lost by network operators because of certain consumers paying reduced network tariffs.
While there would be a significant reduction in the cost burden for the regions concerned, the increase in costs for all electricity consumers would be manageable. The network tariff surcharge for 2024 would have increased by 0.605 ct/kWh. The average household (3,500 kWh/a) would then pay around €21 more per year. The Bundesnetzagentur cannot yet provide any figures for 2025.
High-volume consumers continue to benefit from a reduction in the section 19 StromNEV surcharge, which remains unchanged. Accordingly, the additional costs to industry and other high-volume consumers from the surcharge mechanism under section 19(2) StromNEV amounts to a maximum of around €6,050 a year.
Background
Many electricity distribution networks are being expanded and digitalised to accommodate the feed-in and transport of regionally produced renewable energy. This causes additional costs. The level of these costs varies across the country because wind energy is mostly produced in the north and large-scale solar farms are mainly built in rural regions.
All network costs are refinanced through the network tariffs by the electricity customers. Customers in those regions that would benefit from a reduction in the cost burden currently bear all the costs for integrating renewable energy. At present, the costs are not distributed equally among all network users. In large parts of north and north-east Germany, the network tariffs – as part of the electricity costs – are noticeably higher than in other regions of the country. In some network areas, the network tariffs are up to around 15 ct/kWh, while in others, they are less than 5 ct/kWh. In some federal states, such as Bavaria and Baden-Württemberg, there are also large differences in the network tariffs payable within the state.
Over the years, the situation has developed to an extent that is no longer acceptable, and it would become more acute with further growth in renewable energy. The amendments to energy industry law in December 2023 gave the Bundesnetzagentur competence for taking the relevant decisions on network costs.
Consultation
The key elements paper and the draft determination have been published (in German) at www.bundesnetzagentur.de/BK8-24-001-A. Comments on this second consultation can be submitted between now and 14 June 2024.
In addition, during the course of the consultation, the Bundesnetzagentur will hold a public webinar for all interested parties to provide further information on both the proposed model and its execution as well as on changes from the model presented in the key elements paper. This webinar will only take place online on Friday, 24 May 2024 from 10.30am to 12.00 noon. A link for access to the webinar will be published several days in advance on the Bundesnetzagentur website. A recording of the webinar will be published subsequently.