German Clean-Energy Firms Warn Windfall Levy to Hurt Investments

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(Bloomberg) — Germany’s clean-energy producers are warning that a government proposal to seize windfall profits from power businesses could discourage further investment in renewables.

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Energy giants including RWE AG and EnBW Energie Baden-Wuerttemberg AG — who are both large generators of wind power — addressed the plan alongside earnings reports this week. EnBW CFO Thomas Kusterer cautioned that “earnings skimmed off in this way are fundamentally not available for investment in energy infrastructure.”

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Germany is considering seizing as much as 90% of the profits made by power companies selling on the spot market in order to subsidize consumers’ electricity bills, which have soared amid Europe’s worst energy crunch in decades. 

Such windfall levies are controversial, as they disproportionately affect low-carbon assets like wind and solar farms that can produce relatively cheaply, yet benefit from soaring market prices set by the high cost of natural-gas fired generation. 

A separate report by the German Solar association earlier this week showed that three quarters of its surveyed members intend to delay or cut new spending if politicians move forward with the plan. It argued that higher interest rates, wages and component prices have already raised the cost of solar-park investments by nearly two thirds compared to 2020.

“The proposed construct is too complex, riddled with errors and hostile to investment,” said Simone Peter, president of the German Renewable Energy Association.