Feed-in tariffs in Germany

Feed-in electricity tariffs have been introduced in Germany to encourage the use of new energy technologies such as tidal and wave power, biomass, geothermal energy, solar energy, and wind energy. Each technology is eligible for a different feed-in rate. As of February 2012, feed-in tariffs range from 3.4 ct/kWh for hydropower facilities over 50 MW to 24.43 ct/kWh for solar installations on buildings up to 30 kW.

The aim is to meet Germany’s renewable energy goals of 12.5% of electricity consumption in 2010 and 35% in 2020. The policy also aims to encourage the development of renewable technologies, reduce externalities, and increase security of energy supply.

In 2011, 20 per cent of electricity in Germany came from renewable sources (see BDEW breakdown of electricity production by source) and 70 per cent of this was supported with feed-in tariffs. The Federal Environment Ministry estimates that this will save 87 million tonnes of carbon dioxide by 2012. The average level of feed-in tariff was €0.0953 per kilowatt hour in 2005 (compared to an average cost of displaced energy of €0.047 kWh). The total level of subsidy was €2.4 billion, at a cost per consumer of €0.0056 per kWh (3 per cent of household electricity costs). The tariffs are lowered every year to encourage more efficient production of renewable energy. By 2012, the EEG surcharge - which pays for the additional costs through feed-in tariffs - had increased to 3.592 ct/kWh.

As of 2008, the annual reductions were 1.5% for electricity from wind, 5% for electricity from photovoltaics, and 1% for electricity from biomass. In the first quarter of 2011, 19.2% of Germany's electricity was produced by renewable sources. This is compared to 17.1% in the first quarter of 2010, an increase of 2.1%.

There are about 340,000 people working in the renewable energy sector in Germany, which has an industry turnover of €8.7 billion.

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