EU Nods to German Offshore Surcharge Reductions

The European Commission has found Germany’s plans to grant reductions on an offshore surcharge to electro-intensive users and railways to be in line with EU State aid rules.

Following an amendment to the German Energy Act (EnWG), as of 2019 the costs of connecting offshore wind installations to the main electricity grid will be financed via an offshore surcharge (Offshore-Netzumlage), which will be paid by electricity consumers.

According to the European Commission, the measure will contribute to the competitiveness of these companies without unduly distorting competition in the Single Market.

The amended Act also provides for reductions from this offshore surcharge for certain electro-intensive industrial users, as well as for railway companies. The reductions are expected to confer an advantage to these companies, as it is said to lower their financial burden compared to other companies that will not benefit from them.

These reductions in surcharges were notified to the Commission for review under State aid rules, after which the Commission assessed the measure under both its Guidelines on State aid for environmental protection and energy 2014-2020 and its Guidelines on State aid for railways undertaking.

The Commission found that the reductions are limited to companies that are active in sectors exposed to international trade and are proportionate in regard of electro-intensive users as they provide a sustainable financing basis for supporting offshore wind installations, without putting at risk the competitiveness of companies exposed to international trade.

Germany aims to increase the installed capacity of offshore wind installations to 6.5GW by 2020 and 15GW by 2030. To this end, the German Energy Act provides for the legal framework for the planning, building and operating of the power lines connecting offshore wind installations to the main grid.

The connecting costs, which are currently financed via the general network charges, will be transferred into a surcharge system in order to align the mechanisms of financing the support for electricity produced from renewable energies and cogeneration under the Renewable Energy Act (EEG) and the CHP-Act (KWKG).