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Germany sets windfall tax at 90% for clean power generators

Solar power.

Germany has set out its plan to claw back 90% of the earnings from some clean power generators as the government seeks funding for its consumer aid package.

  • Germany plans to claw back 90% of the earnings from solar, wind and nuclear power generators.
  • The windfall tax will be applied to electricity producers based on the fuel they use.
  • The law is scheduled to pass the upper house on December 16 so that it can go into effect on January 1.

The government is planning to skim earnings above €130 a megawatt-hour for solar, wind and nuclear, according to a draft law seen by Bloomberg News. Politicians are trying to reclaim some of the profits that companies like RWE AG are making from high power prices.

The windfall tax will be applied to electricity producers based on the fuel they use. Lignite plants will be taxed on earnings above €82 a megawatt hour and oil plants above €280. The measures will apply for 10 months, backdated to start of September 2022, until end June 2023 and could be extended to end of 2024.

Germany set out a €54 billion package on November 22 that puts a cap on gas prices for companies and households from next year with more earmarked for electricity. The aid for bills will be partly financed by the windfall tax, from which the government expects to raise a double-digit billion-euro amount, according to officials.

The level proposed is lower than the European Commission’s suggested level of €180 a megawatt hour. Renewable generators in Germany have warned that such a levy will deter investment needed to help the nation wean itself off imported fossil fuels.

The more than 200-page-long law proposal, which is supposed to pass cabinet on Friday, has already provoked widespread criticism from energy lobby groups. Andreas Jung, a lawmaker from the oppositional Christian Democrats, said that the levy will “suffocate” renewable energy companies because they have been investing a lot of money in new technology.

The law is scheduled to pass the upper house on December 16 so that it can go into effect on January 1.

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