Executive Insight, Renewable Energy, Solar, Wind

Spain, Germany cut renewable energy funding to lower electric bills

In response to the European economic downturn, the governments of both Germany and Spain are approving cuts to programs supporting the development of renewable energy projects.

In the early 2000s, Spain and Germany both enacted systems of subsidies to support the growth of renewable energy. Unfortunately for supporters of clean energy and solar and wind technology providers, those supports were tied in to electricity customers’ bills — a system that becomes hard to accept in dire economic circumstances.

German Chancellor Angela Merkel is up for re-election in September 2013 and, according to reports, believes lower electricity bills might help her standing at the polls. For about a decade, Germany’s renewable energy sector has been bolstered by a surcharge on customers’ electricity bills, which recently amounted to about 5 percent more per kilowatt-hour.

This amount could be capped by Merkel’s government until after the election, according to reports, limiting the surcharge to no more than 2.5 percent per year. More complete reforms could occur after the election, according to officials.

Meanwhile, Spain’s energy minister said changes are in the works for that country’s system of renewable energy subsidies. Spain’s parliament passed a law February 14 that is meant to reduce electricity costs.

The new law will curb end-user energy costs by cutting back on subsidies to the renewable energy sector. In total, the law could cut the costs of Spain’s electrical system by up to $1 billion.