Lion Hirth considers current electricity self-consumption system to be a “tax-saving model”

In an op-ed for PV Magazine, Professor of Energy Policy Lion Hirth explains that households generating their own solar power currently save around 30 cents per kilowatt-hour – the standard electricity price. However, the actual market value of that electricity is less than 5 cents, leaving a 25-cent gap that functions as a hidden subsidy. Unlike conventional solar subsidies, this one is neither transparent nor funded through formal mechanisms; instead, it increases costs for other consumers and taxpayers. 

These hidden costs stem from two main factors: fixed-rate electricity tariffs that don’t account for when households consume grid power, and exemptions from taxes and grid fees for self-produced electricity, which benefits higher-income consumers who are usually the ones who can afford to install solar panels.  

Estimates suggest these costs amount to nearly €3 billion annually, which is more per kilowatt-hour than the government’s direct subsidies for solar energy. This is why Lion Hirth proposes a reform that includes levies for self-generated electricity, revising fixed-price tariffs, and introducing dynamic grid charges that reflect actual grid use and incentivise fair contributions from all consumers. 

Read the full article here (in German).

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