German renewable energy cos challenge windfall levy in court

A group of 26 German companies operating wind, solar and biomass-fired power plants have filed a complaint with the Federal Constitutional Court in Karlsruhe against the windfall levy, describing it as unlawful.

The companies led by Hamburg-based power producer LichtBlick SE claim in the complaint that the skimming off of proceeds is wrong as it violates the basic rights of the companies in the industry and slows down the energy transition.

The German government introduced the windfall levy with a retroactive effect as of December 2022 to finance the electricity price brake meant to ease the burden of rising prices on consumers. According to the plaintiffs, the levy is calculated on the basis of fictitious proceeds and in case of particularly high market prices, the entire EEG remuneration for a power plant could be skimmed off and in some cases, the amounts skimmed could even exceed the company's revenue.

The complaint further says that the introduction of the levy means that solar and biomass-fired plants in particular cannot be operated economically, putting entire business areas at risk.

LichtBlick's chief lawyer Markus Adam explained that taxes are imposed on profits, which means on the difference between income and expenses but in the case of the windfall levy, the state skims off fictitious proceeds without considering the expenses.

Germany's economy minister Robert Habeck recently said that the current levy would not be extended beyond June 30, 2023, but LichtBlick is urging the government to abolish it immediately.

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