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German Electricity Prices

by Bjinse Fri Jul 5th, 2013 at 01:23:31 AM EST


The above is from this Economist article, also previously discussed in Jerome's latest wind diary.

While the discussion in the diary revolved around the electricity spot price, there were several other aspects left unexplored. For example, I didn't find an explanation for the increase on the European industrial electricity prices compared to the USA. Specifically, The Economist hints (though nowhere says outright) that the doubling of German industrial electricity prices is a result of rising surcharges due to the expansion of renewables, yet the graph also displays a comparable rise in the European price of industrial consumers - so how does that work out?

Furthermore, the Economist writes about a 25 percent increase in German household bills in the past three years, but doesn't display a graph to compare with industrial electricity, nor with European households. In all, not very satisfying, and after I began digging, it was difficult to stop. But the topic is exhaustive and this diary is thus far from conclusive. Rather, it represents a first overview of the tinkering so far.


The graph is sourced by The Economist as Enerdata/McKinsey - but it is not properly referenced or linked, and no data is provided. So far for journalistic transparency. (I'll attempt differently.)

Numbers on household electricity in Germany were the quickest to find. A first stop at Wikipedia, here, presents some data on household electricity in the European perspective, using Eurostat data of the year 2011 for 17 European countries:

While this indicates that Germany's household electricity had become the highest in 2011, in part due to the addition of the renewables surcharge (the EEG-Umlage), this doesn't show the price evolution through the years. Additionally, Germany's household bills are hardly "40-50% above the EU average" in 2011.

Wikipedia also presents data, from BDEW, the German association of energy and water companies. It is useful to observe how, by 2013, the German electricity price is constituted by at least seven additional components, after the costs for production, transportation and distribution. This includes one license fee funding local authorities (Konzessionsabgabe) and one federal tax (Stromsteuer). Additionally, there is the VAT (Umsatzsteuer), which appears to be raised even across the license fee and federal tax. Does the money of the Umsatzsteuer end up in Berlin? And a tax over a tax, how common is this? Curious minds want to know -apparently (not confirmed) European guidelines forbid taxation across taxation.

In total, the change of electricity prices for a standard German household (nominal) since 1998 looks like:

To confirm these data, I found a more recent report at BDEW also available.

This presentation shows, among others:



With the VAT raised over all components, I find the presentation of the Umsatzsteuer (VAT, abbreviated in the above table as MwSt.) somewhat deceptive in this bar graph - as it only grows proportionally because of the growth of the other constituents. But it still does the trick to show total electricity prices.

An analysis of the BDEW data suggests that since 2003 there is an increase of over 65 percent of the electricity costs for the standard German household up till 2013. In the same period, the contribution of the EEG-Umlage has increased almost twelvefold and is the component with the largest increase. In 2013, the EEG-Umlage forms nearly a fifth of total electricity costs.

Subsequently, with the rise in surcharges, the VAT has also risen: its contribution to total price nearly doubled since 2003. With a VAT at 19 percent, the VAT over the EEG-surcharge constitutes over 20 percent of the total. It remains unclear to me why a VAT should also be raised over surcharges and levies.

Crosschecking the figures of the BDEW with on-line Eurostat numbers is not straightforward: the numbers are not directly comparable. Eurostat compares a range of kWh instead of a defined amount, provides semi-annual numbers, plus the bureau switched to a different methodology after 2007. Also, I've been unable to find an overview of the evolution of the different German surcharges at Eurostat, so there can be no additional study of the price evolution of, for instance, the EEG-surcharge.

Even so, an analysis can be made for the period 2008 - 2012 and compared with the trends as derived from the BDEW. Data used are accessible here, generating the below graph.

By and large, Eurostat data confirm the trends derived from BDEW data: since 2008, the cost of German electricity for household consumers, without levies and surcharges, has only slightly increased, by nearly 10 percent. Total cost of electricity, including these, has increased by 25 percent since 2010 - this is in agreement with the claim of The Economist.

Electricity surcharges and levies (but excluding VAT) increased 63 percent since 2008. Surcharges, levies and VAT constituted 40 percent of the German electricity price in 2008, by the end of 2012 they constituted 46,5 percent - in good agreement with BDEW (in 2012: 45%).

Back to The Economist:

Energy: Tilting at windmills | The Economist

industrial power users are in a bind. As the renewables surcharge has risen, ever more companies have demanded exemptions. The number of officially "energy-intensive" firms has risen from 59 in 2003 to over 2,000 today. Between them they use around a fifth of Germany's power. Companies that do not qualify for the exemption but still use a lot of power are increasingly building their own generating capacity to avoid paying the green levy.

In total, companies forming about 18 percent of total German electric consumption are exempted of the surcharge. At first glance, this flight of German industrial consumers to dodge payment of the renewables surcharge appears problematic: the burden of the surcharge is increasingly carried by the remaining 80 percent, including household consumers, whom, all else being equal, end up paying higher prices to allow exemptions of big industrial consumers.

Digging a little deeper into the EEG, the summary of the 2013 IEA report on Germany, released May, reads and confirms:


The EEG has come under renewed criticism because of the high costs for consumers owing to the fixed FIT payments to operators of renewable power plants and a decreasing amount of chargeable energy consumption to which costs can be allocated. In February 2013, the Federal Minister of Economics and Technology and the Federal Environment Minister presented a joint proposal for a short-term amendment of the EEG to claw back the rising EEG surcharge and expressed their will to fundamentally alter the EEG in the long term.

Despite its success in attracting investment in renewable energy, the federal government has been less successful in controlling the volumes of renewable energy connecting to the system each year. The question remains, therefore, whether steering deployment volumes via a per kilowatt hour (kWh) remuneration will remain effective over the medium to long term. To date, German consumers have absorbed the costs of the EEG but the growing burden on households has ignited a political debate in Germany about the costs of the Energiewende.

And:


There is also debate regarding the allocation of the costs of the Energiewende with some arguing that household consumers carry a disproportionate share of the burden. Under existing arrangements, large consumers of electricity that use more than 10 gigawatt hours (GWh) of electricity per year pay a reduced surcharge (EUR 0.0005 per kWh) on 90% of the electricity they consume with the full surcharge payable on the remaining 10%. Electricity intensive industries that consume more than 100 GWh, and whose electricity bills represent more than 20% of total costs, may pay the lower surcharge on all of their consumption.

These large energy users also benefit from lower wholesale electricity prices brought about by the growth in renewables. Large numbers of producers, who have erected solar PV systems and connected to the distribution system, receive a revenue stream via the EEG. While these producers deliver significant benefits in terms of energy output, they also impose costs on the system, in terms of developing the distribution system and may sometimes act as a disincentive to reduce energy consumption.

In addition, the EIA calls for a reform on the additional electricity charges in Germany and asks for 'more appropriate mechanisms'. The above is also in agreement with quoted paragraph of The Economist.

However, The Economist's suggestive association of industrial electricity prices rising due to the rise of EEG-surcharge remains untested. Still, many German industrial companies are exempt from paying EEG, they profit from the current regulations. And yet, despite exemption, industrial prices of electricity have climbed steeper than the EU average?

Data to answer the initial questions posed above also remain to be parsed: the comparison between trends with households in other European nations, ditto for a comparison between industrial electricity prices. But one needs to start somewhere.

Additional commentary or corrections for improvement are welcomed.

Display:
I'm so not calling this a 'series'. Such an epithet brings almost certainly bad luck - I'll be bogged by something else before I know it.
by Bjinse (bjinsedankert at gmail dot com) on Tue Jul 2nd, 2013 at 05:52:08 PM EST
European Tribune - German Electricity Prices
a tax over a tax, how common is this? Curious minds want to know -apparently (not confirmed) European guidelines forbid taxation across taxation.

VAT on other taxes on the electricity bill is standard in France. I remember when it was introduced (sometime under the Jospin government ie 1997-2002) then Finance Minister Dominique Strauss-Kahn answered questions and protests by saying that it was in application of EU law. I have no further confirmation of that, but it's certainly enshrined in French law.

Our household electricity bill works out, in percent, at about 70% subscription (meter charge) + consumption, and 30% taxes. Of those 30%, roughly half is VAT, which applies to all other items on the bill.

by afew (afew(a in a circle)eurotrib_dot_com) on Wed Jul 3rd, 2013 at 02:54:00 AM EST
There must be many small companies using less than 10 GWh/yr that are thus not exempted from the surcharge. What is the split households/companies in total power consumption anyway?
by mustakissa on Wed Jul 3rd, 2013 at 03:11:51 AM EST
There is this:

So for a first indication: households use one quarter, heavy industry uses nearly half of annual consumption.

Nothing yet found on a breakdown above and below 10 GWh/y - which would here be more relevant.

by Bjinse (bjinsedankert at gmail dot com) on Wed Jul 3rd, 2013 at 05:53:27 AM EST
[ Parent ]
Instead of "heavy industry", read "mining and manufacturing industry".

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Wed Jul 3rd, 2013 at 07:07:15 AM EST
[ Parent ]
Read "process industry". Manufacturing industry uses neglible amounts of power.

We've had this argument in the Swedish debate for decades, that the Volvo factory in Ghent uses half as much power per manufactured car compared to the Volvo factory in Gothenburg. However, this doesn't make much of a difference when you have individual paper mills and smelters using almost as much power as the entire city of Gothenburg, and when these process industries sport world-class energy efficiency.  

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Fri Jul 5th, 2013 at 12:19:03 PM EST
[ Parent ]
many German industrial companies are exempt from paying EEG, they profit from the current regulations

That's the key fact here: the EEG surcharge is a subsidization of consumers who got the "exemptions" by those who didn't, and the surcharge increases if more exemptions are granted. Another issue with the surcharges is that they were created under the erroneous assumption that renewables will not influence market prices, whereas they actually drive market prices down (increasing the surcharge). If politics were about rational decisions, the conclusion would be to drop the exemptions altogether.

A second issue is that AFAIK even the core retail price (without taxes, levies and EEG surcharge) doesn't follow the decline in spot market prices. (Maybe it's on one of your diagrams, but my office content filter blocks all but one of them.)

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Wed Jul 3rd, 2013 at 07:18:35 AM EST
> AFAIK even the core retail price (without taxes, levies and EEG surcharge) doesn't follow the decline in spot market prices

That would point to monopolistic rent-taking on he local level. Intterrresting...

by mustakissa on Wed Jul 3rd, 2013 at 07:27:03 AM EST
[ Parent ]
I wonder if statistics exist as to the extent to which firms purchase directly from the spot market as opposed to being supplied by local utilities. This could be a real issue for the Mittelstand, but one that could be solved by working with sectoral associations to create common purchasing on the spot market.

Moreover, I just read an article about the potential to used compressed air storage to time shift the delivery of electricity.  With industrial firms, the door seems to exist for district compressed air lines that directly run machinery.  Again, this points to an associational solution.

And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg

by ManfromMiddletown (manfrommiddletown at lycos dot com) on Wed Jul 3rd, 2013 at 07:43:15 AM EST
[ Parent ]
Could you expand on that? I'm not following you.
by Bjinse (bjinsedankert at gmail dot com) on Wed Jul 3rd, 2013 at 08:46:13 AM EST
[ Parent ]
Core retail price, thanks - still catching up with jargon as I go along.

I presume your filter blocks pictures hosted at Photobucket, but two diagrams were lifted from this BDEW pdf - also showing an increase in the core retail price. I also read that in Germany distribution costs have actually come down across the years.

by Bjinse (bjinsedankert at gmail dot com) on Wed Jul 3rd, 2013 at 08:40:07 AM EST
[ Parent ]
Yes, it's Photobucket and other major filehosts which are 'filtered' 100% on the basis of possible pornographic content, so said the email announcing the filter a few months ago... I can't see my own Photobucket uploads from work. As for the BDEW pointer, thanks!

Regarding "core retail price", don't take my word on it, the precise English term might be something different. In the linked BDEW document, the German term is "Versorgeranteil" = "the producer's share".

The interesting part is the contrast in "the producer's share of prices" shown on page 5: prices for industry connected to mid-voltage lines (left) and private households [connected to low-voltage lines] (right). The former do show a drop in prices reflecting the spot price decline, albeit only this year (spot prices declined last year already).

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Wed Jul 3rd, 2013 at 11:21:32 AM EST
[ Parent ]
How much the difference in retail price and spot price results from spot prices being lower when consumers and small firms do not use electricity? Small firms are usually closed during nights and weekends while spot prices tend to be lowest during windy nights and summer weekends.
by Jute on Thu Jul 4th, 2013 at 03:19:11 AM EST
[ Parent ]
electricity from gas-fired turbines? If so, gas prices doubled at essentially the same rate as the price of electricity on your first graph. Since such prices are set by almost monopolistic entities (at least when you consider the monolith of utilities and their 'regulators'), prices should trend similarly between the two energy sources.

That certainly accounts for the level price of electricity in the U.S., where the fall in gas price has raised the profits of utilities and the rate of investment in conversion to gas-fired generation.

paul spencer

by paul spencer (spencerinthegorge AT yahoo DOT com) on Wed Jul 3rd, 2013 at 05:31:49 PM EST
Good point, but I think the data indicates this is not too much of a factor. Rising European gas prices would surely affect production costs of electricity, but although gas-fired turbines are a significant contributor to Germany's electricity production, they're not dominant. The above numbers don't reflect a steep rise in the retail electricity price for German households - the numbers indicate the total costs have grown because of increasing surcharges plus taxation.
by Bjinse (bjinsedankert at gmail dot com) on Wed Jul 3rd, 2013 at 06:00:07 PM EST
[ Parent ]
although gas-fired turbines are a significant contributor to Germany's electricity production, they're not dominant

But for marginal pricing, the cost of the most expensive producer is what counts, whatever their share of full production.

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Thu Jul 4th, 2013 at 07:25:25 AM EST
[ Parent ]
Thanks, eurogreen also pointed this out, good to know. I asked him too: How can one determine possible effects of gas on the production price in Germany during the past ten years?
by Bjinse (bjinsedankert at gmail dot com) on Thu Jul 4th, 2013 at 07:36:23 AM EST
[ Parent ]
According to this, a gas price of 3.5 €-cent/kWh results in a price contribution of 6 €-cent/kWh for a modern gas-fired plant. Taking into account older plants, let's assume a multiplier of two. According to the diagram below, most of the variability in consumer gas prices (violet line) originates in the import price at the border crossing (green line), so that should be true for gas for power plants, too.

This would mean that from 2004 to 2008, gas prices increased (rough estimate) 1.5 cents, thus the price of gas-fired power plant electricity increased 3 cents.

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Thu Jul 4th, 2013 at 08:25:48 AM EST
[ Parent ]
Renewable penetration without sufficient storage and interlinks.. Such as is the case of the actually existing grid.. drives the rest of the sector towards natural gas. Natural gas is expensive.
by Thomas on Wed Jul 3rd, 2013 at 06:42:21 PM EST
Again, like I wrote in response to paul spencer, I don't see where or how increased gas prices are reflected in the numbers - retail prices for household consumers have gone only modestly up, the big increase in total price is a result of surcharges.

Crosschecking, electricity production from natural gas trended down in 2011 and 2012 - bucking the trend. And this compares 2002 with 2012 - showing little change in the share of electricity generated by natural gas across ten years.

So yes, increase in gas price should end up in increased production costs - but as of yet I don't find a considerable drive towards natural gas in Germany the past decade.

by Bjinse (bjinsedankert at gmail dot com) on Wed Jul 3rd, 2013 at 07:46:27 PM EST
[ Parent ]
I am not familiar with the German electricity market but if it operates according to the US norm (day ahead bidding etc). In simplified terms, the transmission system operator is basically receiving the bids for the quantity and cost for each hour of the next day by all producers who wish to bid and then assigns the dispatch based on the lowest cost producer until demand is met. All producers who dispatch get the marginal price of the last producer that dispatched.

This is effectively what allows the merit order effect to occur.

As a result even if the last producer only produced one kwh (theoretically) then that is the price of the system - as a result the cost of gas is very very relevant to the wholesale pricing of electricity as usually the gas plants are the swing producers.

Orthodoxy is not a religion.

by BalkanIdentity (balkanid _ at _ google.com) on Thu Jul 4th, 2013 at 02:43:00 AM EST
[ Parent ]
Yes -- and this is why gas hates wind (and solar), because they reduce the number of hours when gas gets to fix the price, as well as reducing the number of hours of operation.

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II
by eurogreen on Thu Jul 4th, 2013 at 04:30:53 AM EST
[ Parent ]
But even more so, it is why (fully amortized) legacy coal-burners hate wind.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu Jul 4th, 2013 at 03:32:59 PM EST
[ Parent ]
And nuclear even more... At least the gas plants are essentially free to build and can be shut down when the price is too low, and coal plants has to pay for coal. Nuclear is more or less 100% fixed costs and have to run 24/7.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Fri Jul 5th, 2013 at 12:23:54 PM EST
[ Parent ]
The private sector lacks the institutional will and aptitude to build and operate nukes anyway.

And government-run nukes don't need P&L statements.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Jul 6th, 2013 at 07:38:22 AM EST
[ Parent ]

(source)

Even better, here an overview by percentages: reliance on gas did increase from 2002 - by about 4 percent.

by Bjinse (bjinsedankert at gmail dot com) on Thu Jul 4th, 2013 at 06:01:43 AM EST
[ Parent ]
... but, again, the influence of the price of gas on the price of electricity is not proportional to its contribution, but to the number of hours when it's the marginal resource.

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II
by eurogreen on Thu Jul 4th, 2013 at 06:08:31 AM EST
[ Parent ]
Thomas wrote that "Renewable penetration without sufficient storage and interlinks (...) drives the rest of the sector towards natural gas" - so I looked for numbers to see to what effect it applied for Germany.

Unpacking the production costs of the different contributors for the past decade is beyond my scope. How can one determine possible effects of gas on the production price in Germany during the past ten years?

by Bjinse (bjinsedankert at gmail dot com) on Thu Jul 4th, 2013 at 07:10:53 AM EST
[ Parent ]
If I understand correctly, the number of hours gas is the most expensive sold (and thus price setting) should be the key. So is there statistics on that and has the number increased?

My guesstimation - with gas being used primarily as top load - is that the number of hours as most expensive is likely to correlate with total volume.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Thu Jul 4th, 2013 at 08:21:03 AM EST
[ Parent ]
There is actually something with even higher marginal cost: oil-fired gas turbines.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Fri Jul 5th, 2013 at 12:25:06 PM EST
[ Parent ]
Messed up linking the pdf. PFD can be found here.
by Bjinse (bjinsedankert at gmail dot com) on Thu Jul 4th, 2013 at 06:59:33 AM EST
[ Parent ]
Rather, it was profits and short-termism that drove the sector towards natural gas from the first half of the 1990s until the middle of the 2000s, and then the rise of solar power and the fall in coal prices acted against that. Electricity from gas rose in jumps from 33 TWh in 1994 to 87 TWh in 2008, but was down to 70 TWh last year.

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Thu Jul 4th, 2013 at 07:33:52 AM EST
[ Parent ]
by Jerome a Paris (etg@eurotrib.com) on Thu Jul 4th, 2013 at 03:26:08 PM EST
[ Parent ]
Less expensive when we see US LNG exports, or even the mere threat of such. Bye-bye oil index-linked gas prices.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Fri Jul 5th, 2013 at 12:21:54 PM EST
[ Parent ]
Let's hope not. That would leave Russia with more hydrogen bombs than hard currency.

In a Europe run by sane people, that would be a solvable problem. In a Europe run by delusional austeritarians (but I repeat myself)...

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Jul 6th, 2013 at 07:36:52 AM EST
[ Parent ]
Tax on tax applies in Ireland in relation to Alcohol.  A duty is charged on alcoholic drinks and then VAT is applied on the total. It seems unfair that smaller electricity consumers should be effectively subsidizing larger consumers but that is probably a function of political negotiating power. Are all the exemptions larger consumers receive reflected in the average electricity prices shown in the graphs, or are those the average prices paid by consumers who don't get the exemptions, and thus is some of the price increase shown a function of the huge increase in the number of exempted consumers?

The bigger issue here is perhaps the question of why electricity is taxed so highly in Europe in the first place. Higher electricity prices mean that electricity's total share of the energy consumption mix is depressed when surely we want to encourage increased electricity consumption (as % of total energy consumption) as the renewable proportion of electricity production rises.

I'm thinking particularly of consumption related to home/office/production building heating which is prohibitively expensive using electricity (in Ireland) and which thus forces oil/gas/coal/turf based home heating systems often using inefficient open fire combustion.

Policymakers should be focusing not just on incentivising an increase in the renewable proportion of electricity production, but in incentivising the consumption of electricity relative to domestic oil, coal, and gas consumption and thus increasing the proportion of renewables in the overall energy consumption mix still further.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Thu Jul 4th, 2013 at 06:47:52 AM EST
It seems unfair that smaller electricity consumers should be effectively subsidizing larger consumers but that is probably a function of political negotiating power.

It's protectionism/mercantilism. Charge the consumers and exempt the export earners (or avoid delocalising industry) by keeping their energy costs down. This is also why Europe's carbon pricing is dead (murder by shock doctrine).

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II

by eurogreen on Thu Jul 4th, 2013 at 07:12:22 AM EST
[ Parent ]
Thanks for the insights Frank.


Are all the exemptions larger consumers receive reflected in the average electricity prices shown in the graphs, or are those the average prices paid by consumers who don't get the exemptions, and thus is some of the price increase shown a function of the huge increase in the number of exempted consumers?

The latter. Numbers above are the equivalent for the 'standard' household, thus consumers which are not exempted. BDEW sticks the average household to the figure of 3500 kWh, Eurostat uses several ranges. The graph using Eurostat data is based on the 2500 - 5000 kWh band.

The bigger issue here is perhaps the question of why electricity is taxed so highly in Europe in the first place.

I'll keep that in mind when (if) I reach the European perspective.

by Bjinse (bjinsedankert at gmail dot com) on Thu Jul 4th, 2013 at 07:26:35 AM EST
[ Parent ]
It was suggested to me by a reasonably senior engineer that it is government/ESB policy for domestic subscribers to subsidise commercial users. It's the sort of thing that passes as industrial policy around here.
by Colman (colman at eurotrib.com) on Thu Jul 4th, 2013 at 07:29:41 AM EST
[ Parent ]
The bottom line is that domestic consumers have nowhere else to go for electricity, mobile international capital does.

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Thu Jul 4th, 2013 at 08:27:11 AM EST
[ Parent ]
Higher electricity prices mean that electricity's total share of the energy consumption mix is depressed

Only where there would be an easy choice between electricity and burning stuff. But using electricity often requires significant and long-term investment, which will be avoided even if electricity is already the cheaper option on the long-term (think of rail electrification). Meanwhile, if you lower taxes, consumption is more likely to rise in ways that don't replace other energy consumption: leaving all the lights and computers on, more elaborate Christmas lights, bigger TVs and such.

If we are to use taxes as an incentive to further electrify energy consumption, then surely in the form of tax increases (for fossil fuels) rather than tax cuts (for electricity).

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Thu Jul 4th, 2013 at 07:44:35 AM EST
[ Parent ]
By all means increase taxes on fossil fuels, but it is the price differential which matters. I doubt the extra electricity usage of a larger TV is a material consideration for most users (and the extra electricity it uses ends up heating the house a little anyway). I am always a bit amused by friends who insist on completely switching off a TV (to save on the tiny amount of power the standby light uses) but insist on keeping their (often poorly insulated)  water heating system on permanently.

However when deciding on a home heating system, the capital cost of a few plug in storage heaters is much less than an oil/gas/solid fuel central heating system - often with underfloor plumbing etc.) and the latter is generally much less efficient or targeted at when you need the heat most. I haven't done the sums recently, but even with night-rate electricity, the cost of an electrical heating system was always prohibitive when the critical house design and modification decisions were being made (as were heat pumps, solar panels, or a domestic wind turbine).

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Thu Jul 4th, 2013 at 08:07:49 AM EST
[ Parent ]
Solar/Eco heating is still highly specialised, so there are limited economies of scale at the consumer end.

But PVs and panel prices have been heading downwards steadily. If some of the subsidies were diverted from Dinosaur Energy to New Energy, it's likely there would be some impressive cost reductions fairly quickly.

As always, the real issues are political. Fossils have had power over governments for a long time, and are embedded in the financial and political establishment.

New Energy is challenging that - but still making good headway, regardless.

The change has to happen eventually. The real question is whether it happens smoothly, or whether fossils lemming themselves and everyone else off the cliff edge before the rest of us get a chance to pick up the pieces and start being sane about energy.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Thu Jul 4th, 2013 at 08:27:05 AM EST
[ Parent ]
the extra electricity it uses ends up heating the house a little anyway

That's no benefit in the summer...

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Thu Jul 4th, 2013 at 08:33:11 AM EST
[ Parent ]
Have you experienced an Irish summer? Even if I only want to achieve a 15 degree summer aminimum room temperature, I still have to turn the heating on sometimes, and that is with a relatively well insulated house...

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Thu Jul 4th, 2013 at 08:37:47 AM EST
[ Parent ]
Yeah I've experienced an Irish summer... I visited in 2006. Can't understand why guys complain so much, the climate was fine.

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II
by eurogreen on Thu Jul 4th, 2013 at 09:20:10 AM EST
[ Parent ]
This seems relevant.
by mustakissa on Thu Jul 4th, 2013 at 01:04:20 PM EST
Additionally, there is the VAT (Umsatzsteuer), which appears to be raised even across the license fee and federal tax.
It's the same in Sweden, VAT is payed on top of price+other taxes.
It remains unclear to me why a VAT should also be raised over surcharges and levies.
The idea is that by doing it this way, the government can extract more money from citizens.
The question remains, therefore, whether steering deployment volumes via a per kilowatt hour (kWh) remuneration will remain effective over the medium to long term.
This is a feature, not a bug. If you subsidise renewable kWh's, that's what the power industry will deliver. Complaining that they actually build the wind mills and then get the subsidies they were promised hardly seems very fair.
There is also debate regarding the allocation of the costs of the Energiewende with some arguing that household consumers carry a disproportionate share of the burden.
In Sweden, industry is exempted from electricity and carbon taxes. This makes a lot of sense as industry is active on the international market, and taxing it that way will reduce its competitiveness, driving it abroad to no use.

People, on the other hand, hardly move abroad because power and diesel is too expensive, so they can be taxed without negative effect.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Fri Jul 5th, 2013 at 12:14:16 PM EST
so they can be taxed without negative effect

Unless you overdo it and people start using their own generators. (I just learnt that some religious people in Israel do this on Saturday because they don't think the national electricity is kosher)

by gk (gk (gk quattro due due sette @gmail.com)) on Fri Jul 5th, 2013 at 12:39:42 PM EST
[ Parent ]
No problem! Just introduce punitive taxation on individual generators as well. :)

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Fri Jul 5th, 2013 at 12:49:09 PM EST
[ Parent ]
It remains unclear to me why a VAT should also be raised over surcharges and levies.

The idea is that by doing it this way, the government can extract more money from citizens.

I little bit too cynical, I daresay... in my understanding this is imposed by the logic of Value Added Tax, which propagates through the manufacturing and trading pipeline to end up at the consumer as a known percentage of the retail price. And those pipelines can be border crossing, making it an EU business to regulate. So, a member state can change a product's VAT percentage, but they cannot exempt part of the its production cost from VAT.

by mustakissa on Fri Jul 5th, 2013 at 03:10:03 PM EST
[ Parent ]
Same happens in UK petrol, you pay VAT on top of Fuel Duty. it's one of those things fuel tax campaigners in the UK complain about

Any idiot can face a crisis - it's day to day living that wears you out.
by ceebs (ceebs (at) eurotrib (dot) com) on Tue Jul 23rd, 2013 at 05:29:17 PM EST
[ Parent ]


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