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The German feed-in tariff revisited - an empirical investigation on its distributional effects

Simon Winter and Lisa Schlesewsky

Energy Policy, 2019, vol. 132, issue C, 344-356

Abstract: In the context of the German energy transition, the financial burdens associated with subsidies for renewable energies have increased substantially in recent years. These costs are passed on to consumers in the form of the EEG levy as a component of the electricity price. However, some households benefit from owning photovoltaic (PV) systems because they receive the corresponding feed-in tariffs. In order to investigate how the benefits (and burdens) of this subsidization scheme are distributed, we use micro-data from SOEP for private households during the period of 2010–2017, and we employ three different inequality metrics – the Gini coefficient, the Theil index and the Atkinson index. We conclude that subsidy costs are almost evenly distributed among the population and are therefore regressive. At the same time, feed-in tariffs are increasingly flowing into higher-income households because PV systems are more prevalent in these households. We estimate the overall impact of this subsidization scheme on several measures of (income) inequality at 1.0–2.4%, most of which is due to the EEG levy. We also find regional distortions in favor of the South and especially at the expense of the East.

Keywords: Feed-in tariff; EEG; Economic inequality; Redistribution; Tax incidence (search for similar items in EconPapers)
JEL-codes: D12 D63 H23 Q40 (search for similar items in EconPapers)
Date: 2019
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Handle: RePEc:eee:enepol:v:132:y:2019:i:c:p:344-356