The European Union will reportedly launch an investigation into Germany’s renewable energy law following allegations it breaches competition rules.
According to information published in German magazine Spiegel, EU Commissioner Joaquin Almunia believes the law, providing framework for Germany’s green transformation, might be in breach with EU legislation and competition rules.
Some of Germany’s energy intensive companies have been exempt from charges imposed on power users in the past while others received generous incentives offered to renewable producers, which has resulted in a boom in the photovoltaics sector.
While German households have to put up with increasing energy bills, virtually paying for subsidies to renewable energy producers, big steel, chemical, glass and building material companies have been granted exemptions from power grid charges.
Those exemptions have reportedly been given to them in an attempt to maintain the competitiveness of German industry that would otherwise suffer from rising energy costs.
The renewable law, drafted ten years ago, was earlier criticised by Germany’s Chancellor Angela Merkel, who was looking into ways to cut some of the subsidies. However, the law has been widely supported by Germany’s federal states that have been blocking any complex changes.
"We urgently need an amendment to the renewable energy law," Merkel told ARD television.
"There are even critical questions coming from Brussels," she said, adding rising energy costs were a problem. She urged Germany's federal states to cooperate on the changes which she has previously said will include reducing renewables subsidies.
The European Commission has been said to table the issue on Wednesday.
The renewable transition is crucial for Germany and especially Merkel, who has set out ambitious goals for the country not only to wean off fossil fuels, but also to phase out nuclear power. The move to renewables, though, has proven to be more costly than expected.