According to lawyers, the electricity price brake that the federal government is aiming for violates the underlying EU law and even the fundamental right to a property guarantee in the German constitution.

In addition, the amendment thwarts the intention to expand renewable energies, according to a legal opinion by the Berlin law firm Raue for the Hamburg energy supplier Lichtblick.

Christian Geinitz

Business correspondent in Berlin

  • Follow I follow

The planned mechanism for skimming off profits will lead to "profound distortions in the German electricity market", write the authors of the paper, which is to be presented this Thursday and has already been submitted to the FAZ.

The consequences are expected to be rising prices for end consumers, a blockade on the further expansion of renewable energies and, in individual cases, the insolvency of system operators.

The drafting aid for an electricity price brake law developed by the Federal Ministry of Economics under Robert Habeck (Greens) is an attempt to transfer the underlying European emergency regulation into national law.

However, the retention of "fictitious proceeds", which Berlin has in mind, is not in line with the EU requirement, which only allows the skimming off of "realized proceeds", argue the lawyers.

Brussels built this restriction in order not to jeopardize special electricity purchase agreements, so-called Power Purchase Agreements (PPA).

If the federal government now undermines this protection, it will undermine such innovative mechanisms and allow the PPA market to collapse, it said.

Ray of light: "unconstitutional special tax"

The purchase contracts are agreements between green electricity producers and bulk buyers, such as industrial companies, at fixed prices.

For new contracts after November 1st, the conditions will change fundamentally when the new law comes into force.

This is shown by the following example: If an existing system that has been phased out supplies a customer with climate-friendly electricity for 120 euros per megawatt hour for two years, the operators expect a surplus of 40 euros at a cost of 80 euros.

However, as soon as the spot market price rises to an average of EUR 300, the supplier would have to pay almost EUR 164 as a levy, according to the traffic light coalition's latest ideas - four times its actual surplus.

This total corresponds to 90 percent of the difference between the spot market revenue used of EUR 300 and the permissible revenue cap of EUR 118 per megawatt hour.

"If the phase of high spot market prices continues, the plant operator will become insolvent a few months later," the lawyers judge.

In order to avoid this risk, producers would in future dispense with PPAs and futures marketing and instead only market their systems via the spot market, usually via a direct marketer.

The negative effects of this development are already evident, for example in falling liquidity on the futures market.

This makes it difficult for public utilities and other suppliers to find long-term contracts at calculable prices, it affects end consumers and also reduces the supply for industry.

According to the report, the result is rising prices.

A shortage of certificates of origin for clean electricity is also feared.

In the PPA process, they do not cause a problem because the electricity goes directly to the customer.

However, if the product is resold on the spot market via direct marketing in the future, the ban on double marketing for subsidized systems will apply and the certificates of origin will no longer apply.

Their supply is shrinking, which is why market prices are rising.

According to the lawyers, skimming off non-existent proceeds violates the property guarantee under Article 14 of the Basic Law.

According to the case law of the Federal Constitutional Court, state tax burdens should not have a confiscatory effect.

The investigation also sees investments in renewable energies at risk.

The skimming plans reduced the returns for smaller photovoltaic projects from 5.3 to 1.8 percent: "With such return prospects, investors will turn to other investment opportunities."

With regard to the planned levy, the energy supplier Lichtblick speaks of an “unconstitutional special levy” and expects a wave of lawsuits against the revenue cap in its current form.

The federal government is repeating its legal mistakes from September when it wanted to introduce a gas procurement levy.

"We are also examining the possibility of taking legal action against the revenue cap in Luxembourg and Karlsruhe," says the group's chief legal officer, Markus Adam.

The company doesn't want to appear to be ignoring the need to redistribute high profits, but it believes the path it's taking is wrong.

A real excess profit tax for renewable energies would be better.

Taxing the sharply increased profits of the plant operators "would be solidarity, legally secure and would not affect the energy transition," said the Hamburger.

They point to the planned additional tax for the natural gas, coal and oil industries as examples.